Any
doubt in the interpretation of these Rules shall be resolved by the
Commission
in a manner which would establish a socially conscious free market that
regulates itself, encourage the widest participation of ownership in an
enterprise, enhance the democratization of wealth, promote the
development
of the capital market, protect investors, ensure full and timely
disclosure
of material information, and/or minimize if not eliminate insider
trading
and other fraudulent or manipulative devices and practices which create
distortions in the free market.

SRC
Rule 3
Definitions
of Terms Used in the Rules and Regulations

1.
As used in the rules and regulations adopted by the Commission under
the
Code,
unless the context otherwise requires:chanroblesvirtuallawlibrary

d.
Beneficial
owner or beneficial ownership means any person who,
directly
or indirectly, through any contract, arrangement, understanding,
relationship
or otherwise has or shares: voting power, which includes the power to
vote,
or to direct the voting of, such security; and/or investment returns or
power, which includes the power to dispose of, or to direct, the
disposition
of such security; provided, however, that a person shall be
deemed
to have an indirect beneficial ownership interest in any security which
is:chanroblesvirtuallawlibrary

i.
held by members of his immediate family sharing the same household;

ii.
held by a partnership in which he is a general partner;

iii.
held by a corporation of which he is a controlling shareholder; or

iv.
subject to any contract, arrangement or understanding which gives him
voting
power or investment power with respect to such securities: Provided
however, the following persons or institutions shall not be deemed
to be beneficial owners of securities held by them for the benefit of
third
parties or in customer or fiduciary accounts in the ordinary course of
business, so long as such shares were acquired by such persons or
institutions
without the purpose or effect of changing or influencing control of the
issuer:chanroblesvirtuallawlibrary

A.
A Broker Dealer;

B.
An investment house registered under the Investment Houses Law;

C.
A bank authorized to operate as such by the Bangko Sentral ng Pilipinas;

D.
An insurance company subject to the supervision of the Office of the
Insurance
Commission;

E.
An investment company registered under the Investment Company Act;

F.
A pension plan subject to regulation and supervision by the Bureau of
Internal
Revenue and/or the Office of the Insurance Commission; and

G.
A group in which all of the members are persons specified above.

All
securities of the same class beneficially owned by a person, regardless
of the form such beneficial ownership takes, shall be aggregated in
calculating
the number of shares beneficially owned by such person.

A
person shall be deemed to be the beneficial owner of a security if that
person has the right to acquire beneficial ownership within thirty (30)
days, including, but not limited to, any right to acquire; through the
exercise of any option, warrant or right; through the conversion of any
security; pursuant to the power to revoke a trust, discretionary
account
or similar arrangement; or pursuant to automatic termination of a
trust,
discretionary account or similar arrangement.

e.
Material
information means information which a reasonable investor would
consider
important in determining whether to buy, sell or hold securities, or in
connection with the exercise of related voting rights.

f.
Control,
controlling, controlled by, and under common control with, means
the
possession, direct or indirect, of the power to direct or cause the
direction
of the management and policies of a person, whether through the
ownership
of voting securities, by contract, or otherwise.

g.
Member
of an Exchange means any Broker Dealer who has
the
right, pursuant to Exchange rules, to trade on that Exchange.

h.
Transfer
agent means any person who engages on behalf of an issuer of
securities, or itself as an issuer of securities, in:chanroblesvirtuallawlibrary

i.
countersigning such securities upon issuance;

ii.
monitoring the issuance of such securities with a view toward
preventing
unauthorized issuance, a function commonly performed by a person called
a registrar;

iii.
registering the transfer of such securities;

iv.
exchange or converting such securities; and/or

v.
transferring record ownership of securities by bookkeeping entry
without
physical issuance of securities certificates.

i. Public company means any corporation with a class of
equity
securities listed on an Exchange or with assets in excess of Fifty
Million
Pesos (P50,000,000.00) and having two hundred (200) or more holders, at
least two hundred (200) of which are holding at least one hundred (100)
shares of a class of its equity securities.

j. Self Regulatory Organization or SRO means an
organized
Exchange, registered clearing agency and any organization or
association
registered as an SRO under Section 39 of the Code
to enforce compliance with relevant provisions of the Code
and rules and regulations adopted thereunder, and mandated to make and
enforce its own rules, which have been approved by the Commission, by
their
members and/or participants.

k.
Rules
and regulations refers to all rules and regulations adopted
by
the Commission pursuant to the Code,
including the forms for registration and reports and accompanying
instructions
thereto.

2.
Unless otherwise specifically stated, the terms used in the rules and
regulations
shall have the meanings defined in the Code.

3.
A rule or regulation which defines a term without express reference to
the Code
or to the rules and regulations, or to a portion thereof, defines such
term for all purposes as used in both the Code
and in the rules and regulations, unless the context otherwise
specifically
requires.

SRC
Rule 3.1-1
Definition
of Investment Contract and Derivative

1. An investment contract means a contract, transaction or scheme
(collectively
“contract”) whereby a person invests his money in a common
enterprise
and is led to expect profits primarily from the efforts of others.

a.
A presumption that a contract is an investment contract arises whenever
a person seeks to use the money of others on the promise of profits.

b.
When two or more investors “pool” their resources, there is a
common
enterprise, even if the promoter does not do more than receive a
broker’s
commission.

2. Derivative with respect to equity securities, means a
financial
instrument, including options and warrants, whose value depends on the
interest in or performance of an underlying security, but which does
not
require any investment of principal in the underlying security.

a.
Options are contracts that give the buyer the right, but not the
obligation, to buy or sell an underlying security at a predetermined
price,
called the exercise or strike price, on or before a predetermined date,
called the expiry date, which can only be extended in accordance with
Exchange
rules.

b.
Call options are rights to buy and put options are rights to sell.

c. Warrants are rights to subscribe or purchase new shares or
existing
shares in a company, on or before a predetermined date, called the
expiry
date, which can only be extended in accordance with Exchange rules.
Warrants
generally have a longer exercise period than options.

1. Clearing agency means any person that provides a facility to a
Broker Dealer, salesman, associated person of a Broker Dealer or
another
clearing agency and whose facility performs any or all of the following
activities:chanroblesvirtuallawlibrary

a.
makes deliveries in connection with transactions in securities;

b.
reduces the number of settlements of securities transactions or to
allocate
securities settlement responsibilities;

c.
provides for the central handling of securities so that transfers,
loans,
and pledges and similar transactions can be made by bookkeeping entry
or
otherwise to facilitate the settlement of securities transactions
without
physical delivery of securities certificates.

2. As used in this Rule, “facility” includes a clearing
agency’s
systems, processes or services and all the tangible or intangible
properties
necessary to operate such system, processes or services, whether within
or without its specific physical location, for purposes of performing
any
or all of the activities set forth in paragraph 1 of this Rule.

3. A registered clearing agency may perform only the activity or
activities
that the Commission has previously approved.

SRC
Rule 3.7.1
Definition
of Facility of an Exchange

Facility
of an Exchange includes systems, processes or services, tangible or
intangible
property, whether or not in a specific physical location or in an
Exchange,
for the purpose of effecting transactions between buyers and sellers in
a securities trading market, and conveying any information required by
the participants to effect such transactions.

SRC
Rule 4
Securities
and Exchange Commission

These Rules shall be implemented by the Commission as a collegial body,
composed of a Chairperson and four (4) Commissioners.

1.
The Commission shall have five (5) principal departments each to be
headed
by a director. Its core functions of capital markets regulation shall
be
performed by the Market Regulation Department, Corporation Finance
Department,
and Non-traditional Securities and Instruments Department, while its
company
registration and enforcement functions shall be performed by the
Company
Registration and Monitoring Department and Compliance and Enforcement
Department,
respectively.

a.
The Market Regulation Department is responsible for developing the
registration
criteria for all market participants and supervising them to ensure
their
compliance with registration requirements and endorsing infractions of
the Code
and rules and regulations to the Compliance and Enforcement Department.

b.
The Corporation Finance Department is responsible for registering
securities
before they are offered for sale or sold to the public and ensuring
that
adequate information is available about the said securities. It will
also
ensure that investors have access to all material disclosures regarding
the said offering and the securities of public companies. It will
likewise
monitor compliance by issuers with the Code
and rules and regulations adopted thereunder and endorse infractions
thereof
to the Compliance and Enforcement Department.

c.
The Non-traditional Securities and Instruments Department is
responsible
for registration and licensing of non-traditional securities and
instruments
including but not limited to pre-need plans, commodity futures
contracts
proprietary or non-proprietary membership certificates and other
similar
instruments and for monitoring compliance with related rules and
endorsing
infractions thereof to the Compliance and Enforcement Department.

d.
The Company Registration and Monitoring Department is responsible for
the
registration of domestic corporations, partnerships and associations,
including
representative offices and foreign corporations intending to do
business
in the Philippines. It is also responsible for the supervision and
monitoring
of such entities relative to their compliance with laws, rules and
regulations
administered by the Commission.

e.
The Compliance and Enforcement Department is responsible for ensuring
compliance
by all market participants, issuers and individuals, and taking
appropriate
enforcement action against them for legal infraction of the Code
and other relevant laws, rules and regulations implemented by the
Commission.

a.
The Human Resource and Administrative Department is responsible for all
activities relating to personnel and human resource management,
including
benefits, training and development. It will also handle the
central receiving, records management, general administrative and
maintenance
services of the Commission.

b.
The Economic Research and Information Management Department is
responsible
for providing investment and economic research, analysis and advice to
the Commission. It is also the lead technical support group of the
Commission
for software development, database management, hardware procurement,
and
establishment and maintenance of a communication network.

c.
The Financial Management Department is responsible for the internal
financial
management of the Commission which includes budgeting, accounting and
cash
management.

3.
The Commission shall have special offices, namely the Office of the
General
Counsel and the Office of the General Accountant.

a.
The Office of the General Counsel, headed by the General Counsel, shall
serve as the lead legal adviser to the Commission. It shall also serve
as legal liaison for the Commission with other government agencies,
self-regulatory
organizations, and foreign government regulators and agencies. It shall
oversee all non-enforcement litigation and all appeals to the
Commission en
banc. It shall likewise oversee the office of the Commission
Secretary.

b.
The Office of the General Accountant, headed by the General Accountant,
shall be responsible for providing advice to the Commission and the
private
sector in the area of accounting standards and on issues of accounting
treatment for public offerings and disclosures. It shall also
coordinate
with any board or council in the development of accounting standards
for
the Philippines and its capital market.

4.
The Commission shall have Extension Offices in key cities, each to be
headed
by a Director. The Extension Offices shall perform the company
registration,
supervision, monitoring and other delegated functions of the Commission
within its geographical jurisdiction. The Directors are responsible for
executing the programs of the Commission in their respective
geographical
jurisdictions, subject to the supervision of the Commission.

5.
The Commission shall hold regular meetings at least once a week on a
day
and time fixed by it. Special meetings may also be called as often as
may
be necessary by the Chairperson or upon the request of three (3)
Commissioners.
In such cases, notice of the meeting shall be given to all
Commissioners
and the presence of three (3) Commissioners shall constitute a quorum.
In the absence of the Chairperson, the most senior Commissioner present
shall act as the presiding officer of the meeting.

6.
The Commission may, for purposes of efficiency, delegate any of its
functions
to any department or office of the Commission, an individual
Commissioner
or staff member of the Commission except its review or appellate
authority
and its power to adopt, alter and supplement any rule or regulation.

7.
The Commission, motu proprio or upon a petition filed by an interested
party, may review any order, resolution, decision or action of any of
its
departments, offices, individual Commissioner, or staff member of the
Commission.

The
petition for review shall be filed with the Office of the General
Counsel
within fifteen (15) days from receipt of the order, resolution,
decision
or any document evidencing the action taken which is the subject of the
review. The petition shall contain, among other things, its factual and
legal basis and shall be signed by the petitioner or counsel.

1.
The Commissioners, including the Chairperson, officers and employees of
the Commission (hereinafter collectively referred to as officers or
officer),
in the execution of their duties owe their undivided loyalty to the
Commission
and shall observe the highest standards of honesty, integrity and good
faith in the performance of their duties.

a.
Officers shall not pursue private activities in any manner which may
conflict
with their duties and shall subordinate those activities which,
although
not in conflict with their duties, will require time and effort to the
prejudice of their duties at the Commission.

b.
Every officer who has discretionary authority shall be free from any
conflicting
interest or influence of such nature and importance as would make it
difficult
for him to provide his best efforts and loyalty to the Commission.

2.
The interest of officers shall include the interest of his or her
spouse,
children under the age of eighteen (18) and trusts for the benefit of
himself,
his or her spouse or children.

3.
Officers shall provide the Commission with complete information with
respect
to any actual or conflicting interest by completing SEC Form 6 and
submitting
such form to the Commission Secretary no later than thirty (30) days
from
the effective date of this Rule. New officers shall fill up this form
and
submit the same to the Commission Secretary thirty (30) days prior to
the
first day of employment.

4.
Even where not specifically required to be disclosed in SEC Form 6,
officers
shall report any other circumstances which, in their judgment, they
regard
as being of possible concern to the Commission. It is to such officer’s
advantage, as well as the Commission’s, that any unclear situation be
reported
in order that a policy judgment can be made. Questions of conflict will
be referred to the Office of the General Counsel. If the Office of the
General Counsel determines that such officer can not properly retain
his
outside interest or relationship and still be employed by the
Commission,
the Office of the General Counsel (after advising those to whom the
officer
reports to of the circumstances) shall require action to eliminate the
conflict, such as the disposition by the officer of his conflicting
interest
or relationship, or the narrowing of responsibilities of the officer.

5.
SEC Form 6 shall be kept current and accurate. Any change to the
information
contained therein shall be reported and filed with the Commission
Secretary
on SEC Form 6-A no later than ten (10) days from the date of such
change.

6.
Set forth below is a description of the types of activities which may
give
rise to a conflict of interest in violation of this Rule and should be
disclosed; provided, however, this is not a comprehensive list:chanroblesvirtuallawlibrary

a.
All officers, directorships, trusteeships or partnership interests in
any
organization or association, whether registered with the Commission or
not (except charitable and civic organizations).

b.
Interest in any securities or investment in any corporation,
partnership
or association registered under and/or required to report under the Code.

c.
The receipt of compensation, wages, bonuses, benefits or privileges
with
monetary value for services from any corporation, partnership, or
association
registered with the Commission or from any person or enterprise which,
though not registered with the Commission, does business with the
Commission
as a supplier, contractor or the like.

d.
Employment of officers during their term of office or employment with
the
Commission and for a period of one year after resignation, retirement
or
separation from such office or employment.

i.
employment as an officer, employee, consultant, counsel, broker, agent,
trustee or nominee in any person or enterprise regulated by the
Commission
under the Code;

ii.
private practice of their profession where such practice conflicts or
tends
to conflict with their official function (e.g. where such
practice
is in connection with any matter before the office of the Commission
such
officer works in or used to work in);

iii.
the recommendation of any person to any position in a private
enterprise
which has a regular or pending official transaction with their office
or
the office such officer used to work with.

e.
Solicitation or acceptance of any gift, loan, or other benefit from any
corporation, partnership or association registered, applying or
contemplating
registration with the Commission, including any person or firm, though
not so registered, applying or contemplating registration and/or having
current or prospective dealings with the Commission as a supplier or
contractor
or the like, if the acceptance would influence or would create the
appearance
of influencing him to act other than solely in the best interest of the
Commission.

i.
Any gift having more than a nominal value, even if given on occasions
of
rejoicing or celebration such as birthdays, anniversaries or Christmas,
shall not be permitted.

ii.
Each officer should disclose the amount and terms (though not
necessarily
the purpose) of his personal transactions with any financial or lending
individual or firm from which he has incurred loans of more than Pesos
250,000 at any time during the past calendar year, or if he is
involved,
by virtue of his position, in significant relationships with any
financial
or lending individual or firm.

iii.
No entertainment should be accepted by any officer of a kind or amount
which would influence, or would create the appearance of influencing
him
to act other than solely in the best interest of the Commission.

SRC
Rule 7
Periodic
Review of Commission Structure

The
Commission shall conduct, once every two (2) years, a review of its
organization
and structure to achieve the goals of the Code
and more efficiently and effectively exercise its powers and functions
thereunder, without prejudice to its power to conduct yearly merit
reviews
and provide increases in compensation based on productivity and
efficiency.

SRC
Rule 8
Requirement
to File Registration Statement

1.
Filing of Registration Statement and Effectivity of Offering

a.
No securities, except of a class exempt under Section 9 of the Code
or unless sold in any transaction exempt under Section 10 thereof,
shall
be sold or distributed by any person within the Philippines unless such
securities shall have been registered with the Commission on SEC Form
12-1
and the registration statement has been declared effective by the
Commission.
Moreover, no securities shall be offered unless a registration
statement
has been filed with the Commission.

b.
If the securities which are the subject of the registration statement
are
intended to be listed on an Exchange, a copy of the registration
statement
and all other pertinent documents shall simultaneously be filed with
that
Exchange. All amendments to the registration statement shall also
simultaneously
be filed with that Exchange. Upon filing of the application for listing
on that Exchange, two (2) copies of the application shall be filed with
the Commission.

c.
Upon the registration statement being declared effective by the
Commission,
the sale of the securities subject thereto shall be commenced within
two
(2) business days and be continued until they have been completely sold
or until the sale has been terminated by action of the issuer. Upon
completion
or termination of the offering by the issuer, notification of such
shall
be promptly given to the Commission. Such notification shall include
the
number of securities sold. If attempts to sell the securities which are
the subject of the registration statement have ceased, the issuer shall
terminate the offering.

d.
After termination of the offering, the sale or offering for sale of
additional
securities shall be effected through a separate registration statement
relating to the additional securities irrespective of whether they had
been previously registered but not sold.

2.
Publication of Notice of Filing

a.
The registrant shall prepare and file with its registration statement a
notification of the filing which shall recite that a registration
statement
for the sale of the subject security has been filed with the
Commission,
that the registration statement is open to inspection by interested
parties
during business hours at the Commission and that copies thereof shall
be
furnished to everyone requesting such at a reasonable charge. The
Code requires the issuer immediately to publish the notification,
at
its own expense, in two newspapers of general circulation in the
Philippines,
once a week for two consecutive weeks. The required format for this
publication
appears as “Annex A.”

b.
The registrant shall submit to the Commission, as part of its filing of
the registration statement, an affidavit with a copy of the publication
that was, or is to be made, attesting that such action has been or will
be immediately taken.

SRC
Rule 8.1-1
Prospectus
Delivery Rule

1.
Prospectus Required. - Securities required to be, and which are,
registered
pursuant to Sections 8 and 12 of the Code
shall not be sold unless a prospectus, which has been filed with the
registration
statement in the form and containing the information hereinafter
described,
is widely disseminated and sufficient copies have been made available
so
that all who desire may obtain one.

2.
Prospectus
Requirements. - In addition to the requirements of this Rule, a
prospectus,
including a preliminary prospectus, shall contain information as
required
by SRC Rule 12 and SEC Form 12-1 and shall be prepared in accordance
with
the requirements of SRC Rule 72.1.

3.
Preliminary
Prospectus. - A preliminary prospectus, which has been filed with
the
registration statement required by Sections 8 and 12 of the Code,
may be circulated to potential investors prior to effectiveness of the
registration statement if the following requirements have been met:chanroblesvirtuallawlibrary

a.
it meets all the requirements for a prospectus contained in paragraph 2
hereof;

b.
it contains the following statement in bold face print, at least 12
point
type prominently displayed:chanroblesvirtuallawlibrary

A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission, but has not yet been declared
effective.
No offer to buy the securities can be accepted and no part of the
purchase
price can be received until the registration statement has become
effective,
and any such offer may be withdrawn or revoked, without obligation or
commitment
of any kind, at any time prior to notice of its acceptance given after
the effective date. An indication of interest in response hereto
involves
no obligation or commitment of any kind. This prospectus shall
not
constitute an offer to sell or the solicitation of an offer to buy.

a.
it is the only selling document utilized in the pre-offering period,
with
the exception that the information contained in SRC Rule 8.3-1 may be
disseminated
in whole or in part to summarize the offering;

b.
its use is such that wide dissemination is assured;

c.
sufficient copies are made available so that all who desire may obtain
one; and

d.
it contains a statement whether the security is being offered in
connection
with a distribution by the issuer or by a security holder, or both, and
whether the issue represents new financing or refunding, or both.

4.
Wide
Dissemination of Preliminary and Final Prospectus. - A preliminary
or final prospectus shall be presumed to have been widely disseminated
pursuant to paragraphs 1 and 3 of this Rule if copies have been
distributed
initially and additional copies have been furnished promptly, upon
request,
to at least the following:chanroblesvirtuallawlibrary

a.
each participant in the distribution (e.g., underwriters and
brokers);

b.
the main and extension offices of the Commission;

c.
an Exchange if the securities will be listed thereon;

d.
the issuer; and

e.
to more than twenty (20) persons who are not qualified buyers under
Section
10.1(l) of the Code.

5.
Notice
of Availability of Prospectus and Preliminary Prospectus. -

a.
All participants in the distribution of an offering of securities to
the
public shall, when inquiries are made as to the offering, inform
interested
persons of the availability of preliminary prospectuses and final
prospectuses
and provide copies if requested.

b.
A notice shall be placed on the front of the subscription agreement
distributed
in connection with the offering informing interested persons that they
are entitled to receive a copy of a preliminary and/or final prospectus
if they so desire and how and where one can be obtained.

c.
Information required in subparagraphs a and b above concerning where
preliminary
and final prospectuses may be obtained shall include at least the
following:
addresses of extension and main offices of the Commission, any Exchange
wherein the securities may be listed, and the issuer company, and the
telephone
number and the person to be contacted at each such location. A
statement
shall also be made that preliminary prospectuses and final prospectuses
are available from all underwriters and brokers participating in the
distribution.

6.
Selling
Documents During Offering Period. - The use of selling documents
other
than the final prospectus during the offering period is prohibited,
with
the exception that the information contained in SRC Rule 8.3-1 may be
disseminated
in whole or in part to summarize the offering.

7.
Limitations
on Use of Preliminary or Final Prospectus. - A preliminary or final
prospectus shall not be used unless all information contained therein
is
up to date and accurately reflects the terms of the offering and the
condition
of the company. Thus, until such time as appropriate amendments are
made
thereto and have been filed with the Commission under SRC Rule 14, the
use of a preliminary or final prospectus and the right to sell and
offer
for sale may be suspended under Section 15 of the Code
when any of the following events occurs:chanroblesvirtuallawlibrary

a.
there is a material change in any information contained therein
(including
but not limited to, the occurrence of a material event which would be
required
to be reported on SEC Form 17-C);

b.
the financial statements contained therein are over 225 days old.

8.
Format
of Prospectus. -

a.
Appearance - The information required in the prospectus need
not follow the
order
of the items or other requirements in Part I of SEC Form 12-1 with the
exception of Items 1 and 2. However, the information shall not be
presented
in a manner that will obscure required information or information that
is necessary to keep required information from being incomplete or
misleading.

b.
Captions
of Headings - All information included in the prospectus should be
properly captioned or headed in order to reasonably indicate covered
subject
matter. The information shall be divided into reasonably short
paragraphs
or sections (with the exception of financial statements and tabular
data).

c.
Condensed or Summarized Form - Except as to information
required
in tabular form and financial statements, the information included in
the
prospectus may be expressed in condensed or summarized
form.
Reference may be made to information in other parts of the prospectus
instead
of repeating the information in the form of notes to the financial
statements.

d.
Date
of Prospectus - Each prospectus used after the effective date of
the
registration statement shall be dated as of the effective date of the
prospectus.
An amended or revised prospectus used thereafter shall bear the date of
its issuance.

Language
Clear and Understandable - All information that is required to be
included
in the prospectus shall be clearly understandable without the necessity
of referring to SEC Form 12-1 or to the general rules and regulations.
The chief goal of registration (disclosure for the benefit of
investors)
involves, among other things, the use of language that can be
understood
readily by the persons to whom it is addressed. Failure to use language
that is clear and understandable to the investor may operate to defeat
the purpose of the prospectus.

SRC
Rule 8.3-1
Written
Communication Not Deemed an Offer for Sale

1.
Any notice, circular, advertisement, letter, or other communication
shall
not be deemed an offer for sale in violation of Section 8 of the Code
if it is published or transmitted to any person after a registration
statement
has been filed and contains any or all of the following information:chanroblesvirtuallawlibrary

a.
the name of the issuer of the security;

b.
the full title of the security and the amount being offered;

c.
a brief indication of the general type of business of the issuer;

d.
the price of the security, or if the price is not known, the method of
its determination or the probable price range as specified by the
issuer
or the managing underwriter;

e.
in the case of a debt security with a fixed (non contingent) interest
provision,
the yield or, if the yield is not known, the probable yield range, as
specified
by the issuer or the managing underwriter;

f.
the name and address of the sender of the communication and the fact
that
he is participating, or expects to participate, in the distribution of
the security;

g.
the names of the underwriters;

h.
the approximate date upon which it is anticipated the proposed sale to
the public will commence;

i.
whether the security is being offered through rights issued to existing
security holders, and, if so, the class of securities the holders of
which
will be entitled to subscribe, the subscription ratio, the actual or
proposed
record date, the date upon which the rights were issued or are expected
to be issued, the actual or anticipated date upon which they will
expire,
and the approximate subscription price, or any of the foregoing;

j.
with respect to any class of debt securities, any class of convertible
debt securities or any class of preferred stock, the security rating or
ratings assigned to the class of securities by any credit rating agency
recognized or accredited by the Commission and the name of such rating
agency/ies which assigned such rating/s.

2.
Every communication used pursuant to this Rule shall contain the
following:chanroblesvirtuallawlibrary

a.
If a registration statement has not yet become effective, the following
statement in bold face prominent type:chanroblesvirtuallawlibrary

A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission, but has not yet become
effective.
These securities may not be sold nor may offers to buy be accepted
prior
to the time the registration statement becomes effective. This
communication
shall not constitute an offer to sell or the solicitation of an offer
to
buy.

b.
A statement whether the security is being offered in connection with a
distribution by the issuer or by a security holder, or both, and
whether
the issue represents new financing or refunding or both;

c.
The name and address of a person or persons from whom a written
prospectus
meeting the requirements of Section 12 of the Code
may be obtained.

SRC
Rule 9.2
Exempt
Securities

Any
security issued by a financial institution licensed by the Bangko
Sentral
ng Pilipinas to engage in quasi-banking, other than its own shares of
stock,
shall be exempt from registration under Section 8.1 of the Code;
provided,
however, that the purchase and sale of any such security shall not
be exempt from antifraud, civil liability or other provisions of the Code.

SRC
Rule 10-1
Exempt
Transactions

1.
Disclosure to Investors. - Any person claiming exemptive relief
under
Section 10.1 of the Code
shall provide to any person to whom they offer for sale or sell
securities
in reliance on such exemption written disclosure containing the
following
information:chanroblesvirtuallawlibrary

a.
The provision of Section 10 of the Code
under which exemption from registration is claimed;

b.
Whether the Commission’s confirmation that such offer and sale
qualifies
as an exempt transaction has been obtained; and

c.
The following statement in bold face, prominent type:chanroblesvirtuallawlibrary

The
securities being offered or sold have not been registered with the
Securities
and Exchange Commission under the Securities
Regulation Code. any future offer or sale thereof is subject to
registration
requirements under the Code
unless such offer or sale qualifies as an exempt transaction.

3.
Exemptive relief under Section 10.1(c) (isolated transaction) shall not
be available to an issuer of securities which shall not be considered
as
an “owner” thereof.

4.
Exemptive relief under Section 10.1(k) (Private Placement) shall be
subject
to the following terms and conditions:chanroblesvirtuallawlibrary

a.
The issuer claiming such relief shall not engage in any form of general
solicitation or advertising in connection therewith;

b.
Securities sold in any such transaction may only be sold to persons
purchasing
for their own account;

c.
Sales may be made to no more than nineteen (19) “non-qualified” buyers.
A corporation, partnership or other entity shall be counted as one
buyer; provided,
however, if that entity is organized for the specific purpose of
acquiring
the securities offered and is not a qualified buyer under Section
10.1(l)
of the Code,
then each beneficial owner of equity securities in the entity shall
count
as a separate buyer under this Rule;

d.
The issuer provides any person to whom they offer for sale or sell
securities
pursuant thereto with the following information:chanroblesvirtuallawlibrary

i.
the exact name of the issuer and its predecessor, if any;

ii.
address of its principal executive offices;

iii.
place of incorporation;

iv.
exact title and class of the security;

v.
par or stated value of the security;

vi.
number of shares or total amount of securities outstanding as of the
end
of the issuer’s most recent fiscal year;

vii.
name and address of the transfer agent;

viii.
nature of the issuer’s business;

ix.
nature of products or services offered;

x.
nature and extent of the issuer’s facilities;

xi.
name of the chief executive officers and members of the board of
directors;

xii.
issuer’s most recent balance sheet and profit and loss and retained
earnings
statement for each of the two preceding fiscal years or such shorter
period
as the issuer (including its predecessor) has been in existence;

xiii.
whether the person offering or selling the securities is affiliated,
directly
or indirectly, with the issuer;

xiv.
whether the offering is being made directly or indirectly on behalf of
the issuer, or any director, officer or person who owns directly or
indirectly
more than ten percent (10%) of the outstanding shares of any equity
security
of the issuer and, if so, the name of such person; and

xv.
information required under paragraph 1 of this Rule.

Provided,
however, where the issuer is a reporting company under Section 17
of
the Code,
a copy of its most recent annual report (SEC Form 17-A) may be used to
provide any of the required information.

e.
The issuer files with the Commission a notice of exemption from
registration
requirements under Section 8 of the Code
on SEC Form 10-1, including as an exhibit thereto, information
furnished
to investors in connection therewith pursuant to this paragraph, within
ten (10) days after the initiation of any efforts to sell the
securities
which are subject thereto.

5.
Confirmation of Availability of Exemption - Any person may apply to the
Commission for confirmation that an exemption under Section 10 is
available,
in which case SEC Form 10-1 shall be filed not later than ten (10) days
prior to the initiation of any efforts to sell the securities which are
subject thereto, and include the prescribed filing fee; provided,
however
that a confirmation of an exemption under Sections 10.1(k) or (l) shall
only be given where the securities sold pursuant to such exemption are
purchased by persons purchasing for their own account and who shall not
sell the same for a period of at least one (1) year (restriction
period)
from the date of such acquisition.

a.
In
connection with a transaction under Subsection 10.1(i), any fee paid
pursuant
to requirements under the Corporation
Code may be applied in satisfaction of fees owed under this Rule.

b.
The Commission shall not be precluded from acting on any application
for
confirmation filed after the initiation of any efforts to sell the
securities.

6.
Burden
of Proof that Such Exemption is Available. -

a.
Unless confirmation that such exemption is available is applied for
under
paragraph 5 of this Rule, any person claiming an exemption under
Section
10 has the burden, if challenged, of establishing that the exemption is
available. The Commission may challenge such exemption at any time.

b.
A presumption that an exemption is not available may arise from the
failure
to file a notice as required by paragraph 4 (e) of this Rule. Failure
to
file such notice shall also subject a person claiming an exemption
under
Section 10 to administrative sanctions.

7.
The sale or offer for sale of a security in any transaction exempt
under
Section 10 is not exempt from antifraud, civil liability or other
provisions
of the Code.

8.
In view of the objective of full and fair disclosure under the Code,
exemptive relief under Section 10 of the Code
is not available to any issuer or other person for any transaction or
chain
of transactions that, although in technical compliance with the Code
and this Rule, is part of a plan or scheme to evade the registration
provisions
of the Code.
In such cases, registration under the Code
is required.

SRC
Rule 11.1
Definition
of Commodity Futures Contracts

1.
Commodity futures contract means a contract providing for the making or
taking delivery at a prescribed time in the future of a specific
quantity
and quality of a commodity or the cash value thereof, which is
customarily
offset prior to the delivery date, and includes standardized contracts
having the indicia of commodities futures, commodity options and
commodity
leverage, or margin contracts.

2.
Commodity means any goods, articles, services, rights and
interests,
including any group or index of any of the foregoing, in which
commodity
interests contracts are presently or in the future dealt in.

3.
Forward means a contract between a buyer and a seller whereby the
buyer is obligated to take delivery and the seller is obliged to make
delivery
of a fixed amount of an underlying commodity at a pre-determined price
and date. Payment in full is due at the time of delivery.

Without
prejudice to applicable Bangko Sentral ng Pilipinas rules and
circulars,
the public trading of commodities futures contracts and pertinent
Commission
rules shall remain suspended until further orders of the Commission.

a.
Registration statements for the sale and/or distribution of securities
pursuant to the provisions of Sections 8 and 12 of the Code
and SRC Rule 8 thereunder. Registration Statements under Section 12 of
the Code
shall be filed on SEC Form 12-1;

b.
Prospectuses to be used in connection with the public distribution of
securities
pursuant to Section 8 of the Code
and SRC Rule 8-1.1 thereunder;

c.
Periodic and other reports required to be filed with the Commission
under
Section 17 of the Code
as provided in SRC Rules 17 and 17-1 and SEC Forms 17-Q, 17-A, 17-C,
and
17-L, as appropriate, unless exempt from the provisions thereof; and

3.
Registration Statements filed pursuant to Section 12 of the Code
shall be accompanied by the prescribed fee.

4.
The issuer shall comply with Section 12.5(b) of the Code
and paragraph 2 of SRC Rule 8 regarding the public notification of the
offer for sale. The prescribed format for publication is contained in “Annex
A”.

5.
In addition to the requirements of this Rule, the filing of forms with
the Commission is governed by the provisions of SRC Rule 72.1,
"General
Rules and Regulations For Filing of SEC Forms With the Securities and
Exchange
Commission." The definitions contained in that Rule and SRC Rule
38-1,
to the extent that they are not defined in “Annex B” shall
govern
the meanings of similar terms used herein.

6.
Information required to be disclosed under this Rule is set forth in “Annex
C”

7.
Definitions of terms used in the forms described in paragraph 1 of this
Rule are set forth in “Annex B”.

SRC
Rule 12-2
Incorporation
by Reference

1.
Incorporation
of Information by Reference. - Except for information filed as an
exhibit,
which is subject to provisions of paragraph 3 hereof, or which is
required
to be contained in a prospectus which is subject to paragraph 4 hereof,
information may be incorporated by reference in answer, or partial
answer,
to any item of a registration statement filed pursuant to SRC Rule 8 or
report filed pursuant to SRC Rule 17 subject to the following
provisions:chanroblesvirtuallawlibrary

a.
Financial statements incorporated by reference shall satisfy the
requirements
of the form or report in which they are incorporated. Financial
statements
or other financial data required to be given in comparative form for
two
or more fiscal years or periods shall not be incorporated by reference
unless the material incorporated by reference includes the entire
period
for which the comparative data is given;

b.
Information in any part of the registration statement or other report
may
be incorporated by reference in answer, or partial answer, to any other
item of the registration statement or other report; and

c.
other report by reference, or copies of the pertinent pages of the
document
containing such information or statements, shall be filed as an exhibit
to the statement or report.

2.
Identification of Incorporated Material. - Material incorporated by
reference shall be clearly identified in the reference by page,
paragraph,
caption or otherwise. Where only certain pages of a document are
incorporated
by reference and filed as an exhibit, the document from which the
material
is taken shall be clearly identified in the reference. An express
statement
that the specified matter is incorporated by reference shall be made at
the particular place in the statement or report where the information
is
required. Matter shall not be incorporated by reference in any case
where
such incorporation would render the statement or report incomplete,
unclear
or confusing.

3.
Incorporation
of Exhibits by Reference. -

a.
Any document or part thereof filed with the Commission pursuant to the Code
may be incorporated by reference as an exhibit to any statement or
report
filed with the Commission by the same or any other person. Any document
or part thereof filed with an Exchange pursuant to the Code
may be incorporated by reference as an exhibit to any statement or
report
filed with that Exchange by the same or any other person.

b.
If any modification has occurred in the text of any document
incorporated
by reference since the filing thereof, the registrant shall file with
the
reference a statement containing the text of any such modification and
the date thereof.

4.
Prospectus.
- Information shall not be incorporated by reference in a
prospectus.

SRC
Rule 13
Obligation
of Issuers Where Registration of Securities Has Been
Suspended
or Revoked During a Public Offering

If,
during a public offering, the Commission revokes the effectivity of a
registration
statement under Section 13 of the Code,
or suspends registration under Section 15 thereof:chanroblesvirtuallawlibrary

1.
The Commission shall publish a notice of such revocation or suspension
in a newspaper of general circulation in the Philippines or on the
Commission’s
web page along with a statement that the offering in its current form
has
been cancelled and the duty of the issuer subject to such order, or any
person acting on behalf of the issuer in the distribution of the
subject
securities, pursuant to paragraph 2 hereof to return any and all
payments
made by purchasers of the subject securities within ten (10) days of
such
publication, and simultaneously furnish a copy of this notice to the
issuer.

2.
Upon receipt of a notice under paragraph 1 above, the issuer and all
persons
acting on its behalf in the distribution of the subject securities
shall
immediately terminate the offering and return any and all payments
received
from purchasers within ten (10) days after the notice is first
published.

SRC
Rule 14
Amendments
to the Registration Statement

1.
If a prospectus filed with the Commission under the Code
becomes incomplete or inaccurate in any material respect or if the
issuer
wants to change any material information therein, the issuer shall:chanroblesvirtuallawlibrary

a.
file an amendment to the registration statement with the Commission
explaining
all proposed changes which shall be reviewed by the Commission in
accordance
with Section 14 of the
Code;

b.
where the registration statement has been declared effective by the
Commission,
publish a notice in two newspapers of general circulation in the
Philippines
stating that the offering in its current form has been cancelled,
citing
the reasons for such proposed changes to the offering, and offering to
rescind all transactions that have been completed for sale to date,
without
making any deduction pursuant to paragraph c below and wait thirty (30)
days for purchasers to respond to the rescission offer before
initiation
of the amended offering; and

c.
where material amendments have been made to the prospectus after the
effective
date thereof, purchasers may, within thirty (30) days from the date of
such notification, renounce their purchase of securities, whereupon the
issuer, or any person acting on behalf of the issuer in connection with
the distribution of said securities, shall, within ten (10) days of
receipt
of notification of such election, return the contributions paid by such
purchasers without making any deductions. Purchasers who decide not to
renounce their purchase of securities shall be subject to the terms of
the amended offering.

2. An amendment containing information regarding the volume of
securities
being offered, the public offering price, underwriters (including
discounts
and commissions), amount of proceeds, and other items dependent on the
offering price (pricing amendment), shall not generally be deemed to be
a material amendment and will not recommence the forty five (45) day
period
under Section 14.2 of the
Code as long as any change in the volume of securities being
offered
or the bona fide estimate of the maximum offering price range,
if
previously indicated, would not materially change the disclosure
contained
in the prospectus.

3.
If after commencement of a public offering, the Commission becomes
aware
that the prospectus is on its face incomplete or inaccurate in any
material
respect, or there is a material omission therefrom, the Commission may
require an issuer to comply with paragraph 1 above or suspend or revoke
registration under Section 13 or 15 of the Code.

4.
If, during a public offering, information other than material
information
in the prospectus changes, the issuer shall file a copy of the new
information/changes
with the Commission prior to making such changes in the registration
statement,
explaining all proposed changes thereto. Unless, within twenty (20)
days
of receipt of such changes, the Commission provides a written response
to the issuer regarding such disclosure, the proposed changes shall be
deemed to be part of the original disclosure: Provided, however,
that a pricing amendment when filed pursuant to paragraph 2 of this
Rule
shall, upon such filing, be deemed to be part of the original
disclosure.

5.
Every amendment to a registration statement shall be signed by the
persons
specified in Section 12.4 of the Code.

6.
There shall be filed with the Commission five (5) complete, unmarked
copies
of every amendment, including exhibits and other papers and documents
filed
as part of the amendment and three (3) additional copies marked to
indicate
clearly and precisely, by underlining or in some other appropriate
manner,
the changes effected in the registration statement by the amendment.

7.
Every amendment which relates to the prospectus shall include copies of
the prospectus, as amended. Only copies of the changed
pages
of the prospectus need to be included in the amendment.

8.
Every amendment of a financial statement which is not included in the
prospectus
shall include copies of the financial statement as amended. A copy of
every
amendment relating to a certified financial statement shall include the
consent of the certifying accountant to the use of his certificate in
connection
with the amended financial statement in the registration statement or
prospectus
and to being named as having certified such financial statement.

9.
The date on which amendments are actually received by the Commission
shall
be the date of filing thereof if all of the requirements of the Code,
and rules adopted thereunder, with respect to such filing have been
complied
with.

SRC
Rule 16.1-1
Transition
Rule for Pre-Need Plans

Rules
and related Commission circulars governing pre-need plan companies and
persons involved in the sale and distribution thereof adopted under the
Revised Securities Act shall continue in force and effect until new
rules
are adopted under the Code.

1.
Applicability
of Filing Requirements. - The reportorial provisions of this
Rule shall apply to the following issuers:chanroblesvirtuallawlibrary

(a)
issuers which have sold a class of their securities pursuant to a
registration
under Section 12 of the Code;
provided, however, the obligation of such issuers to file reports shall
be suspended for any fiscal year after the year such registration
became
effective if such issuer, as of the first day of any such fiscal year,
has less than one hundred (100) holders of such class of securities and
the Commission is duly notified of such; and

(a)
an annual report on SEC Form 17-A for the fiscal year in which the
registration
statement approved by the Commission became effective, and for each
fiscal
year thereafter, within 105 days after the end of the fiscal year;

(b)
a quarterly report on SEC Form 17-Q, within forty five (45) days after
the end of each of the first three quarters of each fiscal year. The
first
quarterly report of the issuer shall be filed either within forty five
(45) days after the effective date of the registration statement or on
or before the date on which such report would have been required to be
filed if the issuer had been required previously to file reports on SEC
Form 17-Q, whichever is later;

(c)
(i) a report on SEC Form 17-C as necessary to make a full, fair and
accurate
disclosure to the public of every material fact or event that occurs
which
would reasonably be expected to affect investors' decisions in relation
to those securities.

(ii)
The disclosure required by subparagraph (c)(i) above shall be made by
the
issuer:chanroblesvirtuallawlibrary

(A)
promptly to the public through the news media;

(B)
if the issuer is listed on an Exchange, to that Exchange within ten
(10)
minutes after occurrence of the event and prior to its release to the
public
through the news media;

(C)
to the Commission on SEC Form 17-C within five (5) days after
occurrence
of the event being reported unless substantially similar information as
that required by Form 17-C has been previously reported to the
Commission
by the registrant.

(iii)
An illustrative, non-all inclusive, list of the kinds of events which
shall
be reported pursuant to this paragraph is contained in SEC Form 17-C.
Merely
because an event does not appear on that list does not mean that it
does
not have to be reported if, in fact, it is material.

3.
Annual
Reports of Predecessors. – Every issuer having securities
registered
with the Commission shall file an annual report on SEC Form 17-A for
each
of its predecessors which had securities registered with the Commission
covering the last full fiscal year of the predecessor prior to the
registrants
succession, unless such report has been filed by the predecessor. Such
annual report shall contain the information that would be required if
filed
by the predecessor.

4.
Reporting
by Successor Issuers. – In the event that a non-reporting issuer
(in
connection with a succession by merger, consolidation, exchange of
securities
or acquisition of assets) issues equity securities to holders of equity
securities issued by a reporting issuer, the non-reporting issuer shall
assume the same obligation as the reporting issuer to file reports
pursuant
to Section 17 of the Code,
and the non-reporting issuer shall file such reports on the same forms
as the reporting issuer.

SRC
Rule 17.1(b)
Information
Statement Rule

1.
Applicability
of SRC Rule 17.1(b). - The provisions of this Rule shall
apply
to issuers required to file reports pursuant to Section 17 of the Code
and SRC Rule 17 thereunder.

2.
Definitions.
- As used in this Rule and in SEC Form 17-IS the following terms
shall
have the meaning indicated:chanroblesvirtuallawlibrary

(a)
Associate, when used to indicate a relationship with any person shall
have
the same meaning as that term is defined in “Annex B”.

(c)
Entity that exercises fiduciary powers means any entity that holds
securities
in nominee name or otherwise on behalf of a beneficial owner.

(d)
Information statement means the statement required by paragraph 3 of
this
Rule

(e)
Last fiscal year of the registrant means the last fiscal year of the
registrant
ending prior to the date of the meeting for which proxies are to be
solicited.

(f)
Proxy includes every proxy, consent or authorization within the meaning
of Section 20 of the Code.

(g) Record date means the date as of which the record holders of
securities
entitled to vote at the meeting or by written consent or authorization
shall be determined.

(h)
Registrant shall have the same meaning as that term is defined in “Annex
B”.

3.
Distribution
of Information Statement. -

a.
In connection with every annual or other meeting of stockholders, the
registrant
shall transmit a written information statement containing the
information
specified in Form 17-IS to every security holder of the class that is
entitled
to vote or give an authorization or consent in regard to any matter to
be acted upon and from whom proxy authorization or consent is not
solicited
on behalf of the registrant pursuant to Section 20 of the Code.

b.
The information statement shall be sent or given at least fifteen (15)
business days prior to the meeting date.

4.
Annual
Report to be Furnished to Stockholders. -

a.
If the information statement relates to an annual (or special meeting
in
lieu of the annual) meeting of stockholders at which directors are to
be
elected, it shall be accompanied or preceded by an annual report to
such
stockholders.

c.
The report required by this paragraph is deemed to satisfy Section 75
of The
Corporation Code of the Philippines with respect to presenting a
financial
report of operations including financial statements to stockholders at
their regular meeting.

5.
Filing
Requirements. -

a.
Preliminary copies of the information statement shall be filed with the
Commission along with the payment of the prescribed fee at least ten
(10)
business days prior to the date definitive copies of such material are
first sent or given to stockholders.

b.
Definitive copies of the information statement and the annual report
pursuant
to paragraph 4 above, in the form in which such material is furnished
to
stockholders shall be filed with, or mailed for filing to, the
Commission
not later than the date such material is first sent or given to any
security
holder. One (1) copy of such material shall at the same time be filed
with,
or mailed for filing to, each Exchange upon which any class of
securities
of the registrant is listed for trading.

6.
False
or Misleading Statements. -

a.
No information statement shall contain any statement which, at the time
and in the light of the circumstances under which it is made, is false
or misleading with respect to any material fact, or which omits to
state
any material fact necessary in order to make the statements therein not
false or misleading or necessary to correct any statement in any
earlier
communication with respect to the same meeting or subject matter which
has become false or misleading.

b.
The fact that an information statement has been filed with or examined
by the Commission shall not be deemed a finding by the Commission that
such material is accurate or complete or not false or misleading, or
that
the Commission has passed upon the merits of or approved any statement
contained therein or any matter to be acted upon by stockholders. No
representation
contrary to the foregoing shall be made.

7.
Providing
Copies of Material for Certain Beneficial Owners. -

a.
If the registrant knows that securities of any class entitled to vote
at
a meeting with respect to which the information statement is being
furnished
are held of record by a broker, dealer, investment house, voting
trustee,
bank, association, or other entity that exercises fiduciary powers in
nominee
name or otherwise, the registrant shall by first class mail or other
equally
prompt means. inquire of such record holders at least twenty (20)
business
days prior to the record date of the meeting:chanroblesvirtuallawlibrary

i.
whether other persons are the beneficial owners of such securities and
if so, the number of copies of the information statement necessary to
supply
such material to such beneficial owners; and

ii.
in the case of an annual (or special meeting in lieu of the annual)
meeting
at which directors are to be elected, the number of copies of the
annual
report to security holders necessary to supply such report to
beneficial
owners to whom such reports are to be distributed by such record holder.

b.
The registrant shall supply, in a timely manner, each record holder of
whom the inquiries required by paragraph 7(a) of this Rule are made
with
copies of the information statement and/or the annual report to
security
holders, in such quantities, assembled in such form and at such
place(s),
as the record holder may reasonably request in order to send such
material
to each beneficial owner of securities who is to be furnished with such
material by the record holder.

c.
Upon the request of any record holder that is supplied with the
information
statement and/or annual reports to security holders pursuant to
paragraph
7(a) of this Rule, the registrant shall reimburse the record holder for
its reasonable expenses for completing the mailing of such material to
beneficial owners.

SRC
Rule 17-1
Notification
of Inability to Timely File All or Any Required Portion of an SEC FORM
17-A or 17-Q

1.
If all or any required portion of an annual report (SEC Form 11-A) or
quarterly
report (SEC Form 17-Q) required to be filed pursuant to Section 17 of
the
Code and SRC Rule 17 thereunder is not filed within the time period
prescribed for such report, the issuer shall, no later than the due
date
for such report, file with the Commission and, if applicable, with the
Exchange where any class of its securities are listed, a SEC Form 17-L
which shall contain disclosure in reasonable detail of its inability to
file the report timely and the reasons therefore. All information which
is available on the date of the required filing shall be filed.

2.
With respect to any report or portion of any report described in
paragraph
1 above which is not timely filed because the issuer is unable to do so
without unreasonable effort or expense, such report shall be deemed to
be filed on the prescribed due date for such report if:chanroblesvirtuallawlibrary

a.
The issuer files the SEC Form 17-L in compliance with paragraph 1
hereof
and, when applicable, furnishes the exhibit required by paragraph 3
hereof;

b.
The issuer represents in the SEC Form 17-L that:chanroblesvirtuallawlibrary

(i)
The reason(s) causing the inability to file timely could not be
eliminated
by the issuer without unreasonable effort or expense; and

(ii)
Either the subject annual report on SEC Form 17-A, or portion thereof,
will be filed no later than the fifteenth calendar day following the
prescribed
due date, or the subject quarterly report on SEC Form 17-Q, or portion
thereof, will be filed no later than the fifth calendar day following
the
prescribed due date; and

c.
The report/portion thereof is actually filed within the period
specified
by paragraph 2(b)(ii) hereof.

3.
If paragraph 2 above is applicable and the reason the subject
report/portion
thereof cannot be filed timely without unreasonable effort or expense
relates
to the inability of any person, other than the issuer, to furnish any
required
opinion, report or certification, the SEC Form 17-L shall have attached
as an exhibit a statement signed by such person stating the specific
reasons
why such person is unable to furnish the required opinion, report or
certification
on or before the date such report must be filed.

4.
Notwithstanding paragraph 2 above, a registration statement filed on
SEC
Form 12-1 pursuant to SRC Rule 8, the use of which is predicated on
timely
filed reports, shall not be declared effective until the subject report
is actually filed pursuant to paragraph 2(c) hereof.

5.
If a SEC Form 17-L filed pursuant to paragraph 1 above relates only to
a portion of a subject report, the issuer shall:chanroblesvirtuallawlibrary

a.
File the balance of such report and indicate on the cover page thereof
which disclosure items are omitted; and

b.
Include, on the upper right corner of the amendment to the report which
includes the previously omitted information, the following statement:chanroblesvirtuallawlibrary

SRC
Rule 18.1
Reports
to be Filed by 5% Beneficial Owners

1.
The provisions of this Rule shall apply to any person who acquires
directly
or indirectly the beneficial ownership of more than five (5%) percent
of
any class of equity securities of a company that satisfies the
requirements
of Subsection 17.2 of the Code.

2.
For purposes of this Rule equity securities means securities which
provide
the holder thereof with voting rights and shall not include convertible
securities and other derivatives except as provided in the definition
of
beneficial owner in SRC Rule 3.

Any
person who qualifies under paragraph 1 of this Rule shall, within five
(5) business days after such acquisition, submit to the Issuer, the
Exchange
where the security is traded, and to the Commission a sworn statement
containing
the information required by SEC Form 18-A.

3.a.
A person required to file a report on SEC Form 18-A may, in lieu
thereof,
file with the Commission, within forty five (45) days after the end of
the year in which such person became so obligated, copies of a short
form
report on SEC Form 18-AS including all exhibits, and send one copy of
such
report to the issuer of the security at its principal executive office
and to each Exchange where the security is listed for trading; Provided,
that
the percentage of the class of equity security beneficially owned as of
the end of the calendar year is more than five (5) percent, and that:chanroblesvirtuallawlibrary

i.
such person has acquired such securities in the ordinary course of
business
and not with the purpose nor with the effect of changing or influencing
the control of the issuer, nor in connection with or as a participant
in
any transaction having such purpose or effect;

B.
A bank authorized to operate as such by the Bangko Sentral ng Pilipinas;

C.
An insurance company subject to the supervision of the Insurance
Commission;

D.
An investment house registered under the Investment Houses Law;

E.
An investment company registered under the Investment Company Act;

F.
A pension plan subject to regulation and supervision by the Bureau of
Internal
Revenue and/or the Insurance Commission; or

G.
A group where all of the members are persons specified above. and

iii.
such person has promptly notified any other person on whose behalf it
holds,
on a discretionary basis, securities exceeding five (5%) percent of the
class, of any acquisition or transaction on behalf of such other person
which might be reportable by that person under Section 18.1(a) of the Code.

b.
Any person who has reported an acquisition of securities on SRC Form
18-AS
but thereafter ceases to be a person specified in paragraph 3(a)(i) or
3(a)(ii) (A)through(G)of this Rule shall file within three (3) business
days thereafter a sworn statement on SEC Form 18-A in the event such
person
is a beneficial owner at that time of more than five (5) percent of the
class of equity securities.

5.
A person, in determining the amount of outstanding securities of a
class
of equity securities, may rely upon information set forth in the
issuer’s
most recent quarterly or annual report, and any current report
subsequent
thereto unless he knows or has reason to believe that the information
contained
therein is inaccurate.

6.
If any material change occurs in the facts set forth in SEC Form 18-A,
including, but not limited to, any material increase or decrease in the
percentage of the class beneficially owned, the person or persons who
were
required to file such Form shall, within three (3) business days file,
or cause to be filed with the Commission and send or cause to be sent
to
the issuer at its principal executive office, by registered or
certified
mail, and to each Exchange on which the security is listed for trading
an amendment disclosing such change. An acquisition or disposition of
beneficial
ownership of securities in an amount equal to five (5%) percent or more
of the class of securities outstanding and/or an acquisition that
results
in an increase in ownership to more than fifty percent (50%) of the
class
of securities outstanding shall be deemed “material” for purposes of
this
paragraph; acquisitions or dispositions of less than such amounts may
be
material, depending on the facts and circumstances.

7.
Any person who has filed an SEC Form 18-AS, pursuant to the provisions
of paragraph 3, shall amend such report within forty five (45) days
after
the end of each calendar year if, as of the end of such calendar year,
there are any changes in the information reported in the previous
filing
on that Form. Copies of such amendment, including all exhibits, shall
be
filed with the Commission and one each sent to the issuer of the
security
at its principal executive office and to the Exchange on which the
security
is listed for trading.

8.
Once an amendment to SEC Form 18-A or SEC Form 18-AS has been filed
reflecting
beneficial ownership of five (5) percent or less of the class of
securities,
no additional filings are required unless the person thereafter becomes
the beneficial owner of more than five (5) percent of the class and is
required to file pursuant to this Rule.

9.
For purposes of Section 18 of the Code,
“beneficial
owner” shall have the same definition as set forth in SRC Rule 3,
provided
that:chanroblesvirtuallawlibrary

a.
A person who, in the ordinary course of business, is a pledgee of
securities
under a written agreement shall not be deemed to be the beneficial
owner
of such pledged securities until the pledgee has taken all necessary
steps
which are required to declare a default and determines that the power
to
vote or to dispose or to direct the disposition of such pledged
securities
will be exercised;

b.
A person engaged in the business of an investment house who acquires
his
securities through his participation in good faith in a firm commitment
underwriting shall not be deemed to be the beneficial owner of such
securities
until the expiration of six (6) months after the date of such
acquisition;
and

c.
When two or more persons agree to act together for the purpose of
acquiring,
holding, voting or disposing of equity securities of an issuer, the
group
formed thereby shall be deemed to have acquired beneficial ownership,
for
purposes of Section 18 of the Code,
as of the date of such agreement, of all equity securities of that
issuer
beneficially owned by such persons.

SRC
Rule 19.1
Tender
Offers

1.
Definitions

a.
Beneficial owner shall have the same meaning as set forth in SRC Rule 3.

b.
Bidder means any person who makes a tender offer or on whose behalf a
tender
offer is made.

c.
Commencement means the date a tender offer is first published, sent or
given to security holders.

d.
Equity securities shall have the same meaning as set forth in SRC Rule
18.1.

e.
Security holders means holders of record and beneficial owners of
securities
that are the subject of a tender offer.

f.
Target company means any issuer of securities that are sought by a
bidder
pursuant to tender offer.

g.
Tender offer means a publicly announced intention by a person acting
alone
or in concert with other persons (hereinafter referred to as “person”)
to acquire equity securities of a public company as defined in SRC Rule
3.

h.
Tender offer materials means:chanroblesvirtuallawlibrary

(i)
the bidder’s formal offer, including all the material terms and
conditions
of the tender offer and all amendments thereto;

(ii)
the related transmittal letter (whereby securities of the target
company
which are sought in the tender offer may be transmitted to the bidder
or
its depository) and all amendments thereto; and

(iii)
press releases, advertisements, letters and other documents published
by
the bidder or sent or given by the bidder to security holders which,
directly
or indirectly, solicit, invite or request tenders of the securities
being
sought in the tender offer.

i.
Termination means the date after which securities may not be tendered
pursuant
to the tender offer.

2.
Mandatory tender offers

a.
Except as provided in paragraph 3 below, a person is required to make a
tender offer for equity shares of a public company in an amount equal
to
the number of shares that the person intends to acquire in the
following
circumstances:chanroblesvirtuallawlibrary

i.
The person intends to acquire fifteen percent (15%) or more of the
equity
shares of a public company pursuant to an agreement made between or
among
the person and one or more sellers;

ii.
The person intends to acquire thirty percent (30%) or more of the
equity
shares of a public company within a period of 12 months; or

iii.
The person intends to acquire shares that would result in ownership of
more than fifty percent (50%) of the equity shares of a public company.

b.
A person shall be presumed to have the intent that would mandate the
making
of a tender offer pursuant to paragraph (a) above when the person,
respectively:chanroblesvirtuallawlibrary

i.
acquires 15% or more of the equity shares of a public company pursuant
to an agreement made between or among the person and the seller or
sellers;

ii.
acquires 30% or more of the shares of a public company within a period
of 12 months; or

iii.
acquires shares that result in ownership of more than fifty percent
(50%)
of the equity shares of a public company.

c.
A mandatory tender offer shall be made in accordance with this Rule.

3.
Relief from Mandatory Tender Offer Requirement

a.
The Commission, upon written application, and consistent with the
policies
set forth in Section 2 of the Code
and pursuant to its powers under Section 72.1 thereof, may exempt from
the requirement to make a mandatory tender offer the following proposed
purchases of equity shares of a public company:chanroblesvirtuallawlibrary

i.
the purchase of newly issued shares from unissued capital stock;

ii.
in connection with foreclosure proceeding involving a duly constituted
pledge or security arrangement where the acquisition is made by the
debtor
or creditor;

iii.
purchases in connection with privatization undertaken by the government
of the Philippines; or

iv.
purchases in connection with corporate rehabilitation under court
supervision.

b.
Purchasers who are granted an exemption are required to comply with
disclosure
and other obligations under SRC Rule 18, SRC Rule 23, and Section 23 of
the Code:
Provided
however, an exemption under paragraph 3(a) of this Rule shall not
become
effective until publicly disclosed by the purchaser in a newspaper of
general
circulation. Such disclosure shall describe the proposed transaction
and
indicate the subsection of paragraph 3(a) above under which exemption
was
claimed. Any person seeking an exemption under this paragraph may not
rely
upon the grant of a previous exemption and shall separately apply for
such
relief.

c.
Equity shares of a public company acquired through open market
purchases
at the prevailing market price shall be automatically exempted from
mandatory
tender offer requirements provided that such purchaser complies with
disclosure
requirements under Sections 18 and 23 of the Code
and rules adopted thereunder.

4.
Voluntary tender offers

a.
A person may make a voluntary tender offer.

b.
A voluntary tender offer shall be made in accordance with this Rule.

c.
A person will be presumed to be making a voluntary tender offer where
some
or all of the following factors are present:chanroblesvirtuallawlibrary

i.
Active and widespread solicitation of public shareholders for the
shares
of a public company;

ii.
Solicitation made for a substantial percentage of the issuer’s stock;

iii.
Offer to purchase is made at a premium over the prevailing market
price,
at firm rather than negotiable terms;

iv.
An offer is contingent on the tender of a fixed number of shares; and/or

v.
Offer is only open for a limited period of time.

5.
Any person making a tender offer shall make a public announcement of
his
intention, prior to the commencement of the offer; Provided,
however,
such announcement shall not be made until the bidder has the resources
to implement the offer in full.

6.
Tender Offer Statement

a.
No bidder shall make a tender offer unless as soon as practicable on
the
date of the commencement of the tender offer such bidder:chanroblesvirtuallawlibrary

i.
Files with the Commission copies of SEC Form 19-1, including all
exhibits
thereto; and

ii.
Hand delivers a copy of such SEC Form 19-1, including all exhibits
thereto
to the target company at its principal executive office and to each
Exchange
where such class of the target company’s securities are listed for
trading.

b.
The bidder shall file with the Commission copies of any additional
tender
offer materials as an exhibit to the SEC Form 19-1 and, if a material
change
occurs in the information set forth in such SEC Form 19-1, copies of an
amendment to such SEC Form. Copies of such additional tender offer
materials
and amendments shall be hand delivered to the company and to any
Exchange
as required above.

c.
The bidder shall report the results of the tender offer by filing with
the Commission, not later than ten (10) calendar days after the
termination
of the tender offer, copies of the final amendments to SEC Form 19-1.

7.
Disclosure Requirements with Respect to Tender Offers

a.
The bidder shall publish, send or give to security holders in the
manner
prescribed in this Rule, a report containing the following information:chanroblesvirtuallawlibrary

i.
Identity of the bidder;

ii.
Identity of the target company;

iii.
Amount of class of securities being sought and the type and amount of
consideration
being offered therefor;

iv.
The scheduled expiration date of the tender offer, whether the tender
offer
may be extended and, if so, the procedures for extension of the tender
offer;

v.
The exact dates security holders who deposit their securities will have
the right to withdraw their securities pursuant to this Rule and the
manner
in which shares will be accepted for payment and in which withdrawal
may
be effected;

vi.
If the tender offer is for less than all of the securities of the class
and the bidder is not obligated to purchase all of the securities
tendered,
the exact date of the period during which securities will be accepted
on
a pro rata basis under this Rule and the present intention or plan of
the
bidder with respect to the tender offer in the event of an
oversubscription
by security holders;

vii.
Confirmation by the bidder’s financial adviser or another appropriate
third
party that resources are available to the bidder sufficient to satisfy
full acceptance of the offer; and

viii.
The information included in SEC Form 19-1.

b.
If any material change occurs in the information previously disclosed
to
security holders, the bidder shall disclose promptly such change in the
manner prescribed by this Rule.

8.
Dissemination of Tender Offers

a.
A bidder may publish, send or make the tender offer by complying fully
with one of the following methods of dissemination:chanroblesvirtuallawlibrary

i.
Long
Form Publication. The bidder may publish in two newspapers of
general
circulation in the Philippines on the date of commencement of the
tender
offer and for two consecutive days thereafter the information required
by paragraph 7 (a) of this Rule; or

ii.
Summary
Publication. The bidder may publish in two
newspapers of
general circulation in the Philippines on the date of commencement of
the
tender offer and for two consecutive days thereafter the information
required
by paragraph 7 (a)(i) through (vii) of this Rule, including appropriate
instructions for security holders regarding how to obtain promptly, at
the expense of the bidder, the information included in SEC Form 19-1,
and
furnish promptly a copy of SEC Form 19-1 to any security holder who
requests
a copy of such information.

b.
If a material change occurs in the information published, sent or given
to security holders, the bidder shall disseminate promptly disclosure
of
such change in a manner reasonably calculated to inform security
holders
of such change.

9.
Manner of Making Tender Offer

a.
The tender offer, unless withdrawn, shall remain open until the
expiration
of:chanroblesvirtuallawlibrary

i.
At least twenty (20) business days from its commencement; provided,
however,
that an offer should generally be completed within sixty (60) days from
the date it is publicly announced; and

ii.
At least ten (10) business days from the date that notice of a change
in
the percentage of the class of securities being sought or in the
consideration
offered is first published, sent or given to security holders.

b.
Where a mandatory tender offer is required, the bidder is required to
offer
the highest price paid by him for such shares during the past six (6)
months.
Where the offer involves payment by transfer or allotment of
securities,
such securities must be valued on an equitable basis.

c.
During the course of a tender offer, or before the commencement thereof
if the board of the target company has reason to believe that an offer
might be imminent, it shall not engage in any of the following
transactions,
except in pursuance of a contract entered into earlier, or with the
approval
of shareholders in a general meeting or, where special circumstances
exist,
Commission approval has been obtained:chanroblesvirtuallawlibrary

i.
Issue any authorized but unissued shares;

ii.
Issue or grant options in respect to any unissued shares;

iii.
Create or issue, or permit the creation or issue of, any securities
carrying
rights of conversion into, or subscription for, shares;

iv.
Sell, dispose of or acquire, or agree to acquire, any assets, the value
of which amounts to five percent (5%) or more of the total value of
assets
prior to acquisition; or

v.
Enter into contracts otherwise than in the ordinary course of business.

d.
The bidder in a tender offer shall permit securities tendered to be
withdrawn:chanroblesvirtuallawlibrary

i.
At any time during the period such tender offer remains open; and

ii.
If not yet accepted for payment, after the expiration of sixty (60)
business
days from the commencement of the tender offer.

e.
If the tender offer is for less than all of the outstanding equity
securities
of a class, and if a greater number of securities is tendered pursuant
thereto than the bidder is bound or willing to take up and pay for, the
securities taken up and paid for shall be taken up and paid for as
nearly
as may be pro rata, disregarding fractions, according to the number of
securities tendered by each security holder during the period such
offer
remains open.

f.
In the event the bidder in a tender offer increases the consideration
offered
after the tender offer has commenced, such bidder shall pay such
increased
consideration to all security holders whose tendered securities are
accepted
for payment by such bidder, whether or not the securities were tendered
prior to the variation of the tender offer’s terms.

g.
The bidder in a tender offer shall either pay the consideration
offered,
or return the tendered securities, not later than ten (10) business
days
after the termination of withdrawal of the tender offer.

h.
No tender offer may be made unless:chanroblesvirtuallawlibrary

i.
The tender offer is open to all security holders of the class of
securities
subject to the tender offer; and

ii.
The consideration paid to any security holder pursuant to the tender
offer
is the highest consideration paid to any other security holder during
such
tender offer.

i.
The bidder in a tender offer may not extend the length of a tender
offer
without issuing a notice of such extension by press release or other
public
announcement, which notice shall include disclosure of the appropriate
number of securities deposited to date and shall be issued no later
than
the scheduled original expiration date of the offer.

10.
Transactions on the Basis of Material, Non-Public Information

If
a person becomes aware of a potential tender offer before the tender
offer
has been publicly announced, such person may not buy or sell, directly
or indirectly, the securities of the target company until the tender
offer
is publicly announced. Such buying or selling shall constitute insider
trading under Section 27.4 of the Code.

Except
with the consent of the Commission, where an offer has been announced
but
has not become unconditional in all respects, and has been withdrawn or
lapsed, neither the bidder nor any person who acted in concert with it
in the course of the offer, may within six (6) months, from the date on
which such offer has been withdrawn or lapses, announce an offer for
the
target company nor acquire any equity securities of the target company
which would require such person to make a mandatory tender offer under
this Rule and Section 19.1 of the Code.

Rule
20
The
Proxy Rule

1.
Applicability of SRC Rule 20

The
provisions of this Rule shall apply to any corporation enumerated in
Section
17.2 that is subject to the reporting requirements of Section 17 of the
Code.

2.
Definitions

a.
As used in this Rule and SEC Form 20, the following terms shall have
the
same meaning as defined in SRC Rule 17.1(b): associate, employee
benefit
plan, entity that exercises fiduciary powers, last fiscal year, proxy,
and record date.

b.
Proxy statement means the statement required by paragraph 3(a) of this
Rule.

c.
Registrant means the issuer of the securities in respect of which
proxies
are to be solicited.

A.
any request for a proxy whether or not accompanied by or included in a
form of proxy;

B.
any request to execute or not to execute, or to revoke, a proxy; or

C.
the furnishing of a form of proxy or other communication to security
holders
under circumstance reasonably calculated to result in the procurement,
withholding or revocation of a proxy.

ii.
The terms do not apply to:chanroblesvirtuallawlibrary

A.
The furnishing of a form of proxy to a security holder upon the
unsolicited
request of such security holder;

B.
The performance by any person of ministerial acts on behalf of a person
soliciting a proxy; or

C.
Any solicitation made otherwise than on behalf of the registrant where
the total number of persons solicited is not more than ten (10).

3.
Information to be Furnished to Security Holders

a.
No solicitation subject to this Rule shall be made unless each person
solicited
is concurrently furnished or has previously been furnished with a
written
proxy statement containing the information specified in SEC Form 20
which
has been filed with the Commission.

b.
If the solicitation is made on behalf of the registrant, and relates to
an annual (or special meeting in lieu of annual) meeting of security
holders
at which directors are to be elected, each proxy statement shall be
accompanied
or preceded by an annual report to security holders as follows:chanroblesvirtuallawlibrary

i.
The report shall include, for the registrant and its subsidiaries,
consolidated,
audited financial statements as required by SRC Rule 68.

ii.
The report shall contain information concerning disagreements with
accountants
on accounting and financial disclosure required by Part III(b) of “Annex
C”.

iii.
The report shall contain management’s discussion and analysis or plan
of
operation required by Part III(a) of “Annex C”.

iv.
The report shall contain a brief description of the general nature and
scope of the business of the registrant and its subsidiaries.

v.
The report shall identify each of the registrant's directors and
executive
officers and shall indicate the principal occupation or employment of
each
such person and the name and principal business of any organization by
which such person is employed.

vi.
The report shall contain the market price of and dividends on the
registrant’s
common equity required by Part II(a) of “Annex C”.

vii.
The proxy statement or the report shall contain an undertaking in bold
face prominent type to provide without charge to each person solicited,
on the written request of any such person, a copy of the registrant's
annual
report on SEC Form 17-A and shall indicate the name and address of the
person to whom such a written request is to be directed. At the
discretion
of management, a charge may be made for exhibits, provided such charge
is limited to reasonable expenses incurred by the registrant in
furnishing
such exhibits.

viii.
Copies of the report sent to security holders pursuant to this rule
shall
be filed, or mailed for filing with, the Commission not later than the
date on which such report is first sent or given to security holders.

ix.
This report is deemed to satisfy Section 75 of The
Corporation Code of the Philippines with respect to presenting a
financial
report of operations including financial statements to stockholders at
their regular meeting.

4.
Requirements as to Form of Proxy and Delivery of Information to
Security
Holders

a.
The form of proxy shall:chanroblesvirtuallawlibrary

i.
indicate in bold-face type on whose behalf the solicitation is made;

iii.
identify clearly and impartially each separate matter intended to be
acted
upon;

iv.
be in writing, signed by the stockholder or his duly authorized
representative;
and

v.
be filed with the Corporate Secretary before the scheduled meeting.

b.
i. Means shall be provided in the form of proxy whereby the person
solicited
is afforded an opportunity to specify by boxes a choice between
approval
or disapproval of, or abstention with respect to, each separate matter
referred to therein as intended to be acted upon, other than elections
to office. A proxy may confer discretionary authority with respect to
matters
as to which a choice is not specified by the security holder provided
that
the form of proxy states in bold-face type how it is intended to vote
the
shares represented by the proxy in each such case.

ii.
A form of proxy which provides for the election of directors shall set
forth the names of persons nominated for election as directors. Such
form
of proxy shall clearly provide any of the following means for security
holders to withhold authority to vote for each nominee:chanroblesvirtuallawlibrary

A.
a box opposite the name of each nominee which may be marked to indicate
that authority to vote for such nominee is withheld;

B.
an instruction in bold-face type which indicates that the security
holder
may withhold authority to vote for any nominee by lining through or
otherwise
striking out the name of the nominee; or

C.
designated blank spaces in which the shareholder may enter the names of
nominees with respect to whom the shareholder chooses to withhold
authority
to vote.

iii.
Any form of proxy which is executed by the security holder in such
manner
as not to withhold authority to vote for the election of any nominee
shall
be deemed to grant such authority, provided that the form of proxy so
states
in prominent bold-face type.

c.
A proxy may confer discretionary authority to vote with respect to any
of the following:chanroblesvirtuallawlibrary

i.
Matters that are to be presented at the meeting but which, at a
reasonable
time before the solicitation, are not known to the persons making the
solicitation;
provided, however, that a specific statement to that effect is made in
the proxy statement or form of proxy;

ii.
Approval of the minutes of the prior meeting if such approval does not
amount to ratification of the actions taken at that meeting;

iii.
The election of any person to any office for which a bona fide nominee
is named in the proxy statement and such nominee is unable to serve or
for good cause will not serve; or

iv.
Matters incident to the conduct of the meeting

d.
No proxy shall confer authority

i.
to vote for the election of any person to any office for which a bona
fide
nominee is not named in the proxy statement;

ii.
to vote with respect to more than one meeting (and any adjournment
thereof),
unless a specific statement is made in the proxy statement and form of
proxy that the proxy is valid for more than one meeting. Provided,
however, that
no proxy shall be valid and effective for a period longer than five (5)
years from the date of the proxy; or

iii.
to consent to or authorize any action other than the action proposed to
be taken in the proxy statement or matters referred to above.

e.
The proxy statement or form of proxy shall provide, subject to
reasonable
specified conditions, that the shares represented by the proxy will be
voted and that where the person solicited specifies by means of a
ballot
provided pursuant to this Rule a choice with respect to any matter to
be
acted upon, the shares will be voted in accordance with the
specifications
so made.

f.
The form of proxy, together with the proxy statement, shall be sent or
given to security holders at least fifteen (15) business days prior to
the meeting date.

5.
Filing Requirements

a.
Preliminary copies of the proxy statement and form of proxy shall be
filed
with the Commission at least ten (10) business days prior to the date
definitive
copies of such material are first sent or given to security holders.
b.
Copies of the definitive proxy statement, form of proxy and all other
soliciting
material, in the form in which such material is furnished to security
holders
shall be filed with, or mailed for filing to, the Commission not later
than the date such material is first sent or given to security holders.
One (1) copy of such material shall at the same time be filed with, or
mailed for filing to, any Exchange upon which any class of securities
of
the registrant is listed for trading.
c.
If the solicitation is to be made in whole or in part by personal
solicitation,
copies of all written instructions or other material which discusses or
reviews, or comments upon the merits of, any matter to be acted upon
and
which is furnished to the persons making the actual solicitation for
their
use directly or indirectly in connection with the solicitation shall be
filed with, or mailed for filing to, the Commission by the person on
whose
behalf the solicitation is made not later than the date any such
material
is first sent or given to such individuals.
d.
If any proxy statement, form of proxy or other material filed pursuant
to this Rule is amended or revised, copies of such amended or revised
material
shall be filed pursuant to this Rule and shall be marked to indicate
clearly
and precisely the changes effected therein.
e.
At the time of filing the preliminary proxy solicitation material, the
person upon whose behalf the solicitation is made, shall pay the
Commission
the prescribed fee.

a.
If the registrant has made or intends to make a proxy solicitation in
connection
with a stockholders’ meeting and a record or beneficial holder of
securities
of the class entitled to vote at the meeting makes a written request to
be provided with a list of stockholders or to mail the requesting
stockholder’s
material, the registrant may, at its option, provide the list or mail
the
material for the requesting stockholder.

b.
If the registrant elects to mail the material for the requesting
stockholder,
the registrant shall:chanroblesvirtuallawlibrary

i.
advise the requesting stockholder promptly of the number of record
holders
and beneficial holders to whom the soliciting materials will be sent;

ii.
advise the requesting stockholder of the estimated cost of mailing a
proxy
statement, form of proxy or other communication to such holders; and

iii.
mail the materials to the stockholders with reasonable promptness.

7.
False or Misleading Statements

a.
No solicitation subject to this Rule shall be made by means of any
proxy
statement, form of proxy, notice of meeting or other communication,
written
or oral, containing any statement which, at the time and in the light
of
the circumstances under which it is made, is false or misleading with
respect
to any material fact, or which omits to state any material fact
necessary
in order to make the statements therein not false or misleading or
necessary
to correct any statement in any earlier communication with respect to
the
solicitation of a proxy for the same meeting or subject matter which
has
become false or misleading.

b.
The fact that a proxy statement, form of proxy or other soliciting
material
has been filed with or examined by the Commission shall not be deemed a
finding by the Commission that such material is accurate or complete or
not false or misleading, or that the Commission has passed upon the
merits
of or approved any statement contained therein or any matter to be
acted
upon by security holders. No representation contrary to the foregoing
shall
be made.

8.
Prohibition of Certain Solicitations

No
person making a solicitation which is subject to this Rule shall
solicit:chanroblesvirtuallawlibrary

a.
any undated or post-dated proxy, or

b.
any proxy which provides that it shall be deemed to be dated as of any
date subsequent to the date on which it is signed by the security
holder.

9.
Special Provisions Applicable to Election Contests

a.
This paragraph applies to any solicitation by any person or group of
persons
for the purpose of opposing a solicitation subject to this Rule by any
other person or group of persons with respect to the election or
removal
of directors at any annual meeting of security holders.

b.
Notwithstanding the provisions of paragraph 3 of this Rule, a
solicitation
subject to this Rule may be made prior to furnishing security holders a
written proxy statement containing the informaton specified in SEC Form
20 with respect to such solicitation, provided that:chanroblesvirtuallawlibrary

i.
No form of proxy is furnished to security holders prior to the time the
written proxy statement required by paragraph 3 of this Rule is
furnished
to security holders. This subparagraph shall not apply where a proxy
statement
then meeting the requirements of SEC Form 20 has been furnished to
security
holders by or on behalf of the other party to the contest.

ii.
The identity of the participants in the solicitation and a description
of their interest, direct or indirect, by security holdings or
otherwise,
are set forth in each communication published.

iii.
A written proxy statement meeting the requirements of paragraph 3(a) of
this Rule is sent or given to security holders being solicited pursuant
to paragraph 9(b) of this Rule at the earliest practicable date.

c.
Copies of any soliciting material published, sent or given to security
holders prior to the furnishing of the written proxy statement required
by paragraph 3 of this Rule shall be filed with the Commission no later
than the date such material is published, sent or given to any security
holder.

d.
The provisions of paragraphs b, c, and d of paragraph 5 of this Rule
shall
apply, to the extent pertinent, to soliciting material subject to
paragraph
9(c) of this Rule.

10.
Obligation of Registrants in Communicating with Beneficial Owners

a.
If the registrant knows that securities of any class entitled to vote
at
a meeting with respect to which the registrant intends to solicit
proxies,
consents or authorizations are held of record by a broker, dealer,
investment
house, voting trustee, bank, association, or other entity that
exercises
fiduciary powers in nominee name or otherwise, the registrant shall by
first class mail or other equally prompt means, inquire of such record
holders at least twenty (20) business days prior to the record date of
the meeting:chanroblesvirtuallawlibrary

i.
whether other persons are the beneficial owners of such securities and
if so, the number of copies of the proxy and other soliciting material
necessary to supply such material to such beneficial owners; and

ii.
in the case of an annual (or special meeting in lieu of the annual)
meeting
at which directors are to be elected, the number of copies of the
annual
report to security holders necessary to supply such report to
beneficial
owners to whom such reports are to be distributed by such record holder.

b.
The registrant shall supply, in a timely manner, each record holder of
whom the inquiries required by this paragraph 10(a) are made with
copies
of the proxy, other proxy soliciting material, and/or the annual report
to security holders, in such quantities, assembled in such form and at
such place(s), as the record holder may reasonably request in order to
send such material to each beneficial owner of securities who is to be
furnished with such material by the record holder.

c.
Upon the request of any record holder that is supplied with proxy
soliciting
material and/or annual reports to security holders pursuant to this
paragraph
10(b), the registrant shall reimburse the record holder for its
reasonable
expenses in completing the mailing of such material to beneficial
owners.

SRC
Rule 23
Reports
to be Filed by Directors, Officers and Principal Stockholders

1.
Every person who is directly or indirectly the beneficial owner of more
than ten per cent (10%) of any class of any equity security of a
company
which satisfies the requirements of Subsection 17.2 of the Code,
or who is a director or an officer of the issuer of such security,
shall:chanroblesvirtuallawlibrary

a.
within ten (10) days after the effective date of the registration
statement
for that security, or within ten (10) days after he becomes such
beneficial
owner, director or officer, subsequent to the effective date of the
registration
statement, whichever is earlier, file a statement with the Commission,
and with an Exchange if the security is listed on that Exchange, on
Form
23-A indicating the amount of all equity securities of such issuer of
which
he is the beneficial owner;

b.
within ten (10) days after the close of each calendar month thereafter,
if there has been any change in such ownership during the month, file a
statement with the Commission, and with an Exchange if the security is
listed on that Exchange, on Form 23-B indicating his ownership at the
close
of the calendar month and such changes in his ownership as have
occurred
during that calendar month; and

c.
notify the Commission if his direct or indirect beneficial ownership of
equity securities falls below ten percent (10%), or if he ceases to be
an officer or director of the issuer. After filing such notification,
he
shall no longer be required to file a Form 23-B.

2.
Beneficial Owner shall have the same meaning as that term is defined in
SRC Rule 3.

3.
In determining, whether a person is the beneficial owner, directly or
indirectly,
of more than ten per cent (10%) of any class of any registered equity
security,
such class shall be deemed to consist of the amount of such class which
has been issued, regardless of whether any part of such amount is held
by or for the account of the issuer; except that for the purpose of
determining
the percentage of ownership of voting trust certificate or certificates
of deposit for securities, the class of voting trust certificate or
certificates
of deposit shall be deemed to consist of the entire amount of voting
trust
certificates or certificates of deposit issuable in respect of the
class
of securities which may be deposited under the voting trust agreement
or
deposit agreement in question, whether or not all of such class has
been
so deposited.

4.
A person filing a statement pursuant to this Rule otherwise than as the
direct beneficial owner of any security shall specify the nature of his
beneficial ownership in such security.

5.
A partner who is required under this Rule to report in respect to any
security
owned by the partnership may include in his statement the entire amount
of such security owned by the partnership and state that he has an
interest
in such security by reason of his membership in the partnership,
without
disclosing the extent of such interest; or such partner may file a
statement
only as to that amount of such security which represent his
proportionate
interest in the partnership, indicating that the statement covers only
such interests.

SRC
Rule 24.1(b)-1
Manipulative
Practices

1.
It shall be unlawful for any person to make a bid or offer, or deal in
securities, with the intention, or if that bid, offer or dealing, has
the
effect or is likely to have the effect, of creating a false or
misleading
appearance of active trading in any security or with respect to the
market
for, or the price of, any security.

2.
It shall be unlawful for any Broker Dealer, associated person or
salesman
of a Broker Dealer (hereinafter collectively referred to as “registered
person”), to make a bid or offer for, or deal in securities, on account
of any other person where the registered person intends to create, or
the
registered person is aware that the other person intends to create, or
taking into account the circumstances of the order, the registered
person
reasonably suspects that a person has placed the order with the
intention
of creating, a false or misleading appearance of active trading in any
security or with respect to the market for, or the price of, any
security.

3.
In considering whether an order violates Section 24 of the Code,
a Broker Dealer shall consider:chanroblesvirtuallawlibrary

a.
Whether the order, or execution of the order, would materially alter
the
market for, and/or the price of, the securities;

b.
The time the order is entered or any instructions concerning the time
of
entry of the order;

c.
Whether the person on whose behalf the order is placed, or another
person
who the Broker Dealer knows to be a related party of that person, may
have
an interest in creating a false or misleading appearance of active
trading
in any security or with respect to the market for, or the price of, any
security;

d.
Whether the order is accompanied by settlement, delivery or security
arrangements
which are unusual;

e.
Whether the order appears to be part of a series of orders, whether
when
put together with orders which appear to make up the series, the order
or the series is unusual having regard to the matters referred to in
this
paragraph 3; and

f.
Whether there appears to be a legitimate commercial reason for that
person
placing the order, unrelated to an intention to create a false or
misleading
appearance of active trading in or with respect to the market for, or
price
of, any security.

Failure
to consider these factors shall raise a presumption that a
transaction/s
is manipulative.

4.
Obligations imposed on registered persons under this rule apply in
respect
of all orders, irrespective of the trading system used.

5.
Set forth below are non-exclusive examples of types of prohibited
conduct:chanroblesvirtuallawlibrary

a.
Engaging in a series of transactions in securities that are reported
publicly
to give the impression of activity or price movement in a security
(e.g.
painting the tape);

b.
Buying and selling securities at the close of the market in an effort
to
alter the closing price of the security (marking the close);

c.
Engaging in transactions where both the buy and sell orders are entered
at the same time with the same price and quantity by different but
colluding
parties (improper matched orders);

d.
Engaging in buying activity at increasingly higher prices and then
selling
securities in the market at the higher prices (hype and dump);

e.
Engaging in transactions in which there is no genuine change in actual
ownership of a security (wash sales);

f.
Taking advantage of a shortage of securities in the market by
controlling
the demand side and exploiting market congestion during such shortages
in a way as to create artificial prices (squeezing the float); or

g.
Disseminating false or misleading market information through media,
including
the internet, or any other means to move the price of a security in a
direction
that is favorable to a position held or a transaction.

SRC
Rule 24.1(d)-1
Advertisements
and Communications with the Public

1.
All communications by Broker Dealers or associated persons or salesmen
of Broker Dealers (hereinafter “registered persons”), with the
public
shall be based on principles of fair dealing and good faith and should
provide a sound basis for evaluating the facts in regard to any
particular
security or securities or type of security, industry discussed, or
service
offered. No material fact or qualification may be omitted if the
omission,
in the light of the context of the material presented, would cause the
advertising or sales literature to be misleading.

2.
Exaggerated, unwarranted or misleading statements or claims are
prohibited
in all public communications of registered persons. In preparing such
literature,
it must be borne in mind by registered persons that inherent in
investment
are the risks of fluctuating prices and the uncertainty of dividends,
rates
of return and yield, and no registered person shall, directly or
indirectly,
publish, circulate or distribute any public communication that he
knows,
or had reason to know, contains any untrue statement of a material fact
or is otherwise false or misleading.

3.
Communications with the public shall not contain promises of specific
results,
exaggerated or unwarranted claims or unwarranted superlatives, opinions
for which there is no reasonable basis, or forecasts of future events
which
are unwarranted, or which are not clearly labeled as forecasts.

4.
In judging whether a communication or a particular element of a
communication
may be misleading, several factors should be considered, including but
not limited to:chanroblesvirtuallawlibrary

a.
the overall context in which the statement or statements are made. A
statement
made in one context may be misleading even though such a statement
could
be perfectly appropriate in another context. An essential test in this
regard is the balance of treatment of risks and potential benefits;

b.
the audience to which the communication is directed. Different levels
of
explanation or detail may be necessary depending on the audience to
which
a communication is directed and the ability of the registered person
given
the nature of the media used, to restrict the audience appropriately.
If
the statements made in a communication would be applicable only to a
limited
audience, or if additional information might be necessary for other
audiences,
it should be kept in mind that it is not always possible to restrict
the
readership of a particular communication; and/or

c.
the overall clarity of the communication. A statement or disclosure
made
in an unclear manner obviously can result in a lack of understanding of
the statement, or in a serious misunderstanding. A complex or overly
technical
explanation may be worse than too little information. Likewise material
disclosure relegated to legends or footnotes realistically may not
enhance
the reader's understanding of the communication.

SRC
Rule 24.1(d)-2
Publication
of Transactions and Quotations

No
Broker Dealer, or associated person or salesman of a Broker Dealer,
shall
publish or circulate, or cause to be published or circulated, any
notice,
circular, advertisement, newspaper article, investment service, or
communication
of any kind which purports to report any transaction as a purchase or
sale
of any security unless such person believes that such transaction was a
bona fide purchase or sale of such security; or which purports to quote
the bid price or asked price for any security, unless such person
believes
that such quotation represents a bona fide bid for, or offer of, such
security.

SRC
Rule 24.1(d)-3
Payment
to Influence Market Prices

No
Broker Dealer shall, directly or indirectly, give, permit to be given,
or offer to give, anything of value to any person for the purpose of
influencing
or rewarding the action of such person in connection with the
publication
or circulation in any newspaper, investment service, or similar
publication,
of any matter which has, or is intended to have, an effect upon the
market
price of any security, provided that this rule shall not be construed
to
apply to matter which is clearly distinguishable as paid advertising.

SRC
Rule 24.2-3
Prohibition
on Guarantees against Loss

No
Broker Dealer or salesman shall guarantee a customer against loss in
any
securities account of such customer carried by the Broker Dealer or in
any securities transaction effected by the Broker Dealer with or for
the
customer.

SRC
Rule 25.1
Definition
of Put, Call, Straddle and Option

1.
Except as provided in paragraph 3 of this Rule, the terms Put, Call and
Option have the same meanings as defined in SRC Rule 3.1-1.

2.
Except as provided in paragraph 3 of this Rule, Straddle involves the
purchase
of an equal number of put options and call options on the same
underlying
security at the same strike price and maturity date. Each option may be
exercised separately, although the combination of options is usually
bought
and sold as a unit.

3.
The terms put, call, straddle, option or privilege shall not include
any
registered warrant, right or convertible security.

SRC
Rule 26.3-1
Use
of Information Obtained in Fiduciary Capacity

A
Broker Dealer, associated person or salesman of a Broker Dealer, a
paying
agent, transfer agent, trustee, or any other person acting in a similar
fiduciary capacity, who has received information as to the ownership of
securities, shall not make use of such information for the purpose of
soliciting
or making purchases, sales or exchanges of securities or, except as
provided
in SRC Rule 30.2-9, provide such information to any person who does not
need such information to fulfill his responsibilities under the Code.

SRC
Rule 26.3-2
Prohibited
Representations

It
shall be unlawful for any:chanroblesvirtuallawlibrary

a.
Person to represent that he has been registered as a securities
intermediary
with the Commission unless such person is registered under the Code.
Registration
under the Corporation
Code shall not be deemed to be registration under the Code;

b.
Broker Dealer to represent that the registration of the Broker Dealer
under
the Code,
or the failure of the Commission to deny, suspend, or revoke such
registration,
indicates in any way that the Commission has passed upon or approved
the
financial standing, business, or conduct of such Broker Dealer, or the
merits of any security or any transaction/s conducted thereby; and/or

c.
Person to represent that a security is a particular type of security
when
such representation is inconsistent with a stated definition under the Code
or rules or regulations adopted thereunder, or internationally accepted
practice.

SRC
Rule 28.1-1
Registration
of Brokers and Dealers

1.
A person applying for registration as a Broker Dealer under Section 28
shall indicate in the application form for registration, or in an
amendment
thereto:chanroblesvirtuallawlibrary

a.
Whether he is an Exchange member or non-Exchange Member;

b.
If an Exchange member, whether he shall engage in market making
transactions;

c.
If a non-Exchange member, whether he is operating a seat for or using
the
trading rights of an Exchange member;

d.
If a non-Exchange member, whether he shall deal only with proprietary
shares.

a.
by a Broker Dealer which complies with Commission and Exchange rules
regarding
its duty as a market maker; and

b.
to ensure two way quotes, provide liquidity, and maintain a fair and
orderly
trading market therein.

3.
An applicant for registration as a Broker Dealer shall be solely
engaged
in the business of a Broker Dealer.

4.
Every application for registration as a Broker Dealer shall be
filed
on SEC Form 28-BD and be accompanied by the following papers or
documents:chanroblesvirtuallawlibrary

a.
A continuing authorization for the Commission’s duly authorized
representative
to verify the applicant’s bank accounts. The authorization shall be for
all banks wherein accounts are maintained by the Broker Dealer, its
subsidiaries
or affiliates, and persons under common control with the Broker Dealer
and shall be continuous with registration by the Commission;

b.
Indicating compliance with paid up capital requirements pursuant to
paragraph
5(e) of this rule in lieu of the surety bond to secure compliance with
the Code:
Provided,
however, that Broker Dealers who do not meet the new paid up
capital
requirements under paragraph 5(e) of this Rule, are seeking new
registration
under the Code
shall obtain a surety bond in compliance with SRC Rule 28.1-5;

c.
Valid work permit of foreigners connected in any capacity with the
applicant;

d.
Copies of identity cards/passports of individual applicants and
directors
and persons who control more than ten percent (10%) of a class of
voting
securities of corporate applicants;

e.
Written supervision and control procedures, including procedures for
establishing
and maintaining a “Chinese wall” pursuant to SRC 34.1-3;

f.
A schedule of minimum commission charges as required by SRC Rule 30.2-5;

g.
Calculation of net capital requirements in accordance with paragraph
5(b)
of this Rule and SRC Rule 49.1-1;

h.
Evidence of educational, professional/technical or other academic
qualifications
of Officers, Associated Persons and Salesmen;

i.
Latest audited financial statement;

j.
Where applicant has been in existence for more than one year, certified
copies of income tax returns for the two years preceding date of
application;

k.
Organization chart, including branch offices;

l.
If the applicant is a corporation, a certified copy of the following
documents
under oath, by the corporate secretary:chanroblesvirtuallawlibrary

1.
With respect to a foreign corporation, certificate that the board of
directors
has authorized, in a resolution, the President and Secretary to sign an
irrevocable consent to service of process upon the Commission as
service
to the corporation;

2.
Articles of Incorporation indicating that the purpose of the applicant
is to engage in the business of a Broker Dealer; and

3.
Board resolution attesting to particulars contained in the application;
and

m.
Business plan regarding proposed and/or current operations, including
projected
volume of business. Such plan should reflect applicant’s ability and
plans
to engage in a profitable level of business.

5.
Initial and ongoing terms and conditions for registration.

a.
Applicant shall be a member in good standing of an SRO; Provided,
however
that any applicant who is not a member of an SRO may only be granted
registration
conditioned upon future membership in an SRO;

b.
Net Capital in the amount of Five Million Pesos or five percent (5%) of
aggregate indebtedness whichever is higher, calculated in accordance
with
SRC Rule 49.1-1;

c.
Membership or participation in a Trust Fund accredited by the
Commission
under SRC Rule 36.4 (a)-1;

d.
Where the Broker Dealer is a participant in a registered clearing
agency,
which is not solely engaged in the business of a securities depository,
fulfillment of its obligation to contribute to the guarantee fund;

e.
Unimpaired paid up capital for Broker Dealers who are seeking new
registration
under the Code,
including those acquiring existing Broker Dealers, in the amount of 100
Million Pesos: Provided, however, that any existing Broker
Dealer
who is currently registered under the Revised Securities Act and plans
on engaging in market making transactions shall likewise have the same
paid-up capital: Provided further, that non Exchange member
applicants
who will deal only with proprietary shares shall have unimpaired
paid-up
capital of P5 Million: Provided, finally, that other existing
Broker
Dealer applicants currently registered under the Revised Securities Act
and seeking new registration under the Code,
who are not seeking authorization to engage in market making
transactions,
and who do not have an unimpaired paid up of 100 Million Pesos, shall
file
the required surety bond in lieu of new paid up capital until such time
that the Exchange is demutualized and the Commission mandates a new
paid-up
capital requirement in view thereof;

f.
Registration of each branch office;

g.
At least one trained and registered salesman at each registered branch
office. All salesmen of the applicant shall apply for registration as a
salesman under SRC Rule 28.1-1;

h.
At least one registered Associated Person. Any person with supervisory
responsibility for the applicant shall apply for registration as an
Associated
Person under SRC Rule 28.1-1;

i.
A sufficient number of back office staff at the main office of the
applicant;

j.
A computerized and effective recording and accounting system;

k.
Separate bank accounts for client funds;

l.
Separate bank account for firm funds;

m.
Separate office premises and facilities;

n.
Reporting, using SEC Form 28-BDA, any changes in the information
provided
in the application form to the Commission in writing with seven (7)
days
of such changes; and

o.
Timely payment of prescribed annual fees and filing of reports required
under the rules and regulations.

SRC
Rule 28.1.2
Registration
of Successor to Broker Dealer

1.
In the event that a Broker Dealer succeeds to and continues the
business
of another Broker Dealer, the registration of the predecessor Broker
Dealer
shall be deemed to remain effective as the registration of the
successor
if the successor, within thirty (30) days after such succession, files
an application for registration on SEC Form 28-BD and the Commission,
within
such period, approves such registration: Provided, however, the
registration of the predecessor Broker Dealer will cease to be
effective
forty five (45) days after the publication of registration on SEC Form
28-BD is filed by such successor.

2.
The following are examples of the types of reorganizations that require
the success or of a Broker Dealer to file a new application:chanroblesvirtuallawlibrary

a.
An unregistered entity purchases or assumes substantially all of the
assets
and liabilities of a Broker Dealer, and the unregistered entity then
operate
the business of the Broker Dealer;

b.
If two or more registered Broker Dealers consolidate their firms and
conduct
their business through a new unregistered entity which assumes
substantially
all of the assets and liabilities of the predecessor entities, the new
entity shall file a complete application on SEC Form 28-BD, while the
predecessor
firms shall each be required to file for withdrawal from registration
under
SRC Rule 28.1-3.

3.
Notwithstanding paragraph 1 of this Rule, the successor may file an
amendment
to the registration of the predecessor Broker Dealer on SEC Form 28-BDA
instead of an original application for registration, within thirty (30)
days after the succession in the following instances:chanroblesvirtuallawlibrary

a.
A corporate reorganization or restructuring that does not result in a
change
in control of the Broker Dealer; or

b.
A succession resulting from a change in the form of business, such as
from
a partnership to a corporation.

SRC
Rule 28.1-3
Withdrawal
from Registration of a Broker Dealer

1.
Notice of withdrawal from registration as a Broker Dealer shall be
filed
on SEC Form 28-BDW in accordance with the instructions contained
therein.

2.
A notice to withdraw from registration filed by a Broker Dealer shall
become
effective on the sixtieth (60th) day after the filing thereof with the
Commission or within such shorter period of time as the Commission may
determine. If a notice to withdraw from registration is filed with the
Commission at any time subsequent to the date of issuance of a
Commission
order instituting proceedings pursuant to Section 29 of the Code
to suspend or revoke the registration of such Broker Dealer, or if,
prior
to the effective date of the notice of withdrawal, the Commission
institutes
such proceedings or a proceeding to impose terms and conditions upon
such
withdrawal, the notice of withdrawal shall not become effective except
at such time and upon such terms and conditions as the Commission deems
necessary or appropriate in the public interest or for the protection
of
investors.

l.
A person may not be employed as a salesman or associated person of a
Broker
Dealer unless registered as a salesman or associated person under this
Rule.

2.
For purposes of this Rule:chanroblesvirtuallawlibrary

a.
Salesman shall not include any employee of an issuer whose compensation
is not determined directly or indirectly on sales of securities of the
issuer.

b.
Associated person shall mean any person employed by the Broker Dealer
whose
responsibilities include supervision of other employees, agents,
salesmen,
officers, directors, clerks and stockholders of such Broker Dealer for
compliance with the Code
and rules and regulations adopted thereunder.

3.
Notice of discontinuation of employment of a salesman or associated
person
and the reasons therefor, shall be provided to the Commission by the
employing
Broker Dealer by filing SEC Form 28-T no later than thirty (30) days
after
the discontinuation of employment.

4.
Every application for registration as a salesman or associated person
shall
be filed on SEC Form 28-S, or SEC 28-AP, respectively, verified under
oath
by the Broker Dealer who is the employer of the salesman or associated
person, be accompanied by the prescribed fee and the following papers
and
documents:chanroblesvirtuallawlibrary

a.
Valid work permit if the applicant is a foreigner;

b.
Copies of identity cards/passports of applicant;

c.
Evidence that such person has complied with applicable examination
requirements
or meets other educational, professional or technical qualifications;
and

d.
Evidence that a Broker Dealer has agreed to employ such person
contingent
upon such person’s registration as a salesman or associated person.

5.
Terms and conditions for applicants for registration:chanroblesvirtuallawlibrary

a.
Applicants shall be only natural persons employed by a Broker Dealer;

b.
Applicants for salesmen shall be at least 18 years of age and
applicants
for associated person shall be at least 21 years of age;

c.
Applicants for registration as a salesman shall have no disciplinary
history
that would subject them to disqualification from registration under
Section
29 of the Code;

d.
Applicants for registration as an associated person, shall not have
been
censured or reprimanded by a professional, trade or regulatory body for
negligence, incompetence or mismanagement, or dismissed or requested to
resign from any position or office for negligence, incompetence or
mismanagement,
or be subject to any other disqualification under Section 29 of the Code;

e.
If the applicant is applying for registration as a salesman or
associated
person for the first time, he must first be certified by the SRO with
whom
his employer is a member or participant, as a Certified Securities
Representative
or Certified Associated Person; and

f.
Applicants shall have at least three (3) years experience as a
registered
salesman or associated person or no later than three (3) years
from
date of application passed applicable examination requirements; Provided,
however, that all applicants shall be able to demonstrate an
understanding
of the Code
and rules and regulations adopted thereunder, the particular Exchange
and/or
clearing agency rules that apply to the functions that they would
perform,
any obligations imposed by those provisions and rules, and the
fiduciary
obligations owed to clients and the general obligations owed to
employers.

6.
The registration of a salesman or associated person shall cease when he
is no longer employed by the Broker Dealer identified in his
registration
application.

7.
Duties of an Associated person. An Associated person shall:chanroblesvirtuallawlibrary

a.
actively participate in the business of the Broker Dealer for whom he
is
employed;

b.
be responsible for supervising other employees, agents, salesmen,
officers,
directors, clerks and stockholders of the Broker Dealer for compliance
with the Code
and rules and regulations adopted thereunder;

c.
be responsible for overseeing compliance with legislative and other
regulatory
requirements (such as notifying the Commission of material changes in
information
previously filed, maintaining registers, books of accounts and other
records,
compliance with rules, orders and laws relating to trading, issuing
confirmation
receipts, compliance with margin rules, net capital and other financial
requirements);

d.
ensuring that all salesmen of the Broker Dealer are registered and that
the Commission is notified when any salesmen is no longer employed by
the
Broker Dealer;

e.
developing procedures and monitoring on a daily basis compliance with
financial
resource requirements; and

f.
ensuring that there is an audit trail which enables compliance with
applicable
laws, Exchange, clearing agency and other SRO rules.

8.
As a condition for maintaining their status as such, registered
salesmen
and associated persons shall:chanroblesvirtuallawlibrary

a.
Report any changes in the information provided in the application form
to the Commission in writing within seven (7) days of such changes,
using
SEC Form 28-AMD;

b.
Observe at all times the provisions of this Code,
all rules and regulations adopted thereunder, and applicable Exchange,
clearing agency and other SRO rules; and

c.
Be able to demonstrate an on-going understanding of applicable
regulatory
requirements and Exchange, clearing agency, and other SRO rules.

9.
Every registered salesman and associated person shall pay the
Commission,
no later than one year from the anniversary date of their registration
date, the annual prescribed fee. If such fee is not paid, the
registration
of such person shall be suspended until payment has been made, but if
not
paid prior to the expiration of thirty (30) days after the required
payment
date, the registration shall be terminated.

SRC
Rule 28.1-5
Broker
Dealer Surety Bond

The
amount of surety bonds required to be filed pursuant to SRC Rule 28.1-1
by Broker Dealers who have elected to defer compliance with paid up
capital
requirements pursuant to that Rule is fixed at not less than Five
Million
Pesos (P5,000,000.00) for Brokers and not less than One Million Pesos
(P1,000,000.00)
for Dealers. Such bonds shall be conditioned upon the
faithful
compliance with the provisions of the Code
and rules and regulations adopted thereunder by said Broker Dealer and
by all salesmen and Associated Persons while acting for him. Such bond
shall be executed by a surety company authorized to do business in the
Philippines. In lieu of such bond, the Broker Dealer may file bonds of
the Government of the Philippines. If a bond is filed, any person
damaged
by the failure of such Broker Dealer or of any salesman or Associated
Person
while acting for him, to comply with the provisions of this Code
and rules and regulations adopted thereunder shall be entitled to sue
the
sureties under such bond and to recover the damages so suffered
thereunder.
If other securities are filed in lieu thereof, such person may subject
such securities to the payment of such damage.

No
Broker Dealer shall effect any transaction in, or induce the purchase
or
sale of, any security unless the employee of such Broker Dealer who
effects
or is involved in effecting such transaction is registered or approved
in accordance with the standards of training, experience, competence,
and
other qualification standards (including, but not limited to,
submitting
and maintaining all required forms, paying all required fees, and
passing
the required examinations) established by the rules of any Exchange or
other Self Regulatory Organization where such Broker Dealer is a Member
of or Participant in.

SRC
Rule 29
Protection
of Customer Accounts Where Registration of a Broker Dealer is Suspended
or Revoked

Where
the Commission has suspended or revoked the registration of a Broker
Dealer
under Section 29 of the Code:chanroblesvirtuallawlibrary

1.
Where such Broker Dealer is a Member of an Exchange, the Exchange shall
immediately arrange for another Member to take over any outstanding
contracts
relating to securities, simultaneously notify the Commission in writing
of such transfer and any affected customers that their accounts have
been
transferred, and provide such customers with the opportunity to
re-transfer
their account to another Broker Dealer of their choice; or

2.
Where such Broker Dealer is not a Member of an Exchange, the Commission
shall notify any affected customers of such suspension or revocation
and
require that they transfer their account to another Broker Dealer.

SRC
Rule 30.1
Monitoring
of Affiliated Transactions by Broker Dealers

1.
Every Broker Dealer shall request every stockholder, director,
associated
person, salesman and authorized clerk of the Broker Dealer
(collectively
referred to as “director”) to complete and submit to the Broker
Dealer an executed copy of SEC Form 30.1 under oath (hereinafter
referred
to as the “questionnaire”) to ensure compliance with the
prohibitions
set forth in Section 30.1 of the Code.

2.
Based on information set forth in the questionnaire, every Broker
Dealer
shall provide the Commission with a list of securities that the Broker
Dealer is prohibited from dealing in, purchasing or selling, and shall
file an amendment thereto with the Commission, within twenty four (24)
hours of any change thereto.

3.
Every director shall ensure that his questionnaire is accurate and
complete
at all times and shall update and submit to the Broker Dealer any
amendments
thereto within twenty four (24) hours to reflect any change thereto.

4.
The failure of any director to comply with this rule shall be deemed a
violation of the Code.

SRC
Rule 30.2-1
Ethical
Standards Rule

1.
Every Broker Dealer, associated person and salesman of a Broker Dealer
(hereinafter referred to as a “registered person”), in the
conduct
of his business, shall observe high standards of commercial honor and
just
and equitable principles of trade.

2.
In considering whether a registered person is conducting his business
in
an ethical and fair manner, the Commission, in addition to requirements
imposed under other SRC rules, will be guided by the following
principles
and requirements which incorporate International Organization of
Securities
Commission standards:chanroblesvirtuallawlibrary

a.
Honesty
and fairness - In conducting his business activities, a registered
person should act honestly, fairly and in the best interest of his
client
and the integrity of the market.

Where
a registered person advises or acts on behalf of a client, he shall
ensure
at all times that any representations or other communications made and
information provided to the client are accurate and not misleading and
do not violate SRC Rule 24.1(d)-1.

b.
Diligence.
- In conducting his business activities, a registered person should act
with due skill, care and diligence, in the best interests of his
clients
and the integrity of the market:chanroblesvirtuallawlibrary

i.
A registered person shall take all reasonable steps to execute promptly
client orders in accordance with the instruction of clients.

ii.
A registered person when acting for or with clients shall always
execute
client orders on the best available terms in compliance with SRC rule
32.2(a)-2.

iii.
A registered person shall ensure that transactions executed on behalf
of
clients are promptly and fairly allocated to the accounts of the
clients
on whose behalf the transactions were executed.

iv.
When providing advice to a client, a registered person shall act
diligently
and ensure that his advice and recommendations in relation to clients
are
based on thorough analysis and take into account available alternatives.

c.
Capabilities.
- A registered person should have and employ
effectively
the resources and procedures which are needed for the proper
performance
of his business activities:chanroblesvirtuallawlibrary

i.
A registered person shall ensure at all times that any person he
employs
or appoints to conduct business for or with clients or other registered
persons is qualified, including having relevant training or experience
to act in the capacity so employed or appointed in compliance with SRC
Rules 28.1-4 and 28.2-3.

ii.
A registered person shall ensure that at all times, pursuant to SRC
Rule
30.2-7 he has:chanroblesvirtuallawlibrary

A.
adequate resources to supervise diligently and does supervise
diligently
his employees and persons appointed by him to conduct business for or
with
clients or other registered persons; and

B.
satisfactory internal control procedures and financial and operational
capabilities which can be reasonably expected to protect his
operations,
his clients and other registered persons from financial loss arising
from
the theft, fraud and other dishonest acts, professional misconduct or
omissions.

d.
Information
about clients. -

i.
A registered person should seek from his clients information about
their
financial situation, investment experience and investment objectives
relative
to the services to be provided pursuant to SRC Rule 52.1-6.

ii.
A registered person shall take all reasonable steps to establish the
true
and full identity of each of his clients, their financial situation,
investment
experience, and investment objectives.

iii.
Having regard to information disclosed by a client and other
circumstances
relating to the client which the registered person is or should be
aware
of through the exercise of due diligence, the registered person shall,
when making a recommendation or solicitation, ensure the suitability of
such recommendation or solicitation for that client is reasonable in
all
circumstances pursuant to SRC Rule 30.2-4.

iv.
A registered person providing services to any client, in relation to
derivatives,
including options and warrants, or any leveraged transaction, shall
assure
himself that the client understands the nature and risks of these
instruments
and has sufficient net worth to be able to assume the risks and bear
the
potential losses of trading in such instruments.

v.
A registered person shall be satisfied on reasonable grounds about the
identity, address and contact details of the person ultimately
responsible
for originating the instruction in relation to a transaction, the
person
who stands to gain the commercial or economic benefit of the
transaction
and/or bears the commercial or economic risk: Provided, however,
that in relation to an investment company, or discretionary account,
the
person referred to above is the investment company or account, not
those
who hold a beneficial interest therein.

vi.
A registered person shall keep in the Philippines a record of the
details
referred to above and provide the Commission with access to those
records
upon request pursuant to Section 52 of the Code
and SRC Rule 52.1-1.

vii.
As required in SRC Rule 30.2-4, a registered person shall not do any
thing
to effect a transaction unless he has first complied with the
requirements
of this Rule.

a.
Information for clients. - A registered person shall make
adequate
disclosure of material information in his dealings with his clients.

i.
A registered person shall ensure that a written agreement which
complies
with SRC Rule 30.2-3 is entered into with a client before any services
are provided to that client.

ii.
A registered person shall provide clients with adequate information
about
his firm, including his business address, any relevant conditions or
restrictions
under which the registered person conducts his business, and the
identity
or status of employees and others acting on his behalf with whom the
client
may have contact.

iii.
After a registered person has effected a transaction for a client, he
shall
endeavor to confirm promptly with the client, in writing, the essential
features of the transaction pursuant to SRC Rule 30.2-2.

v.
A registered person shall disclose the financial condition of his
business
to a client upon request by providing a copy of the most recent report
required to be filed with the Commission under SRC Rule 52.1-5 (net
capital)
and disclose any material changes which adversely affect the registered
person’s financial condition after the date of such filing.

b.
Conflicts
of Interest. - A registered person should avoid conflicts of
interest
and when they can not be avoided, should ensure that his clients are
fairly
treated.

i.
Client
priority: A registered person shall handle orders
of clients
fairly and in the order in which they are received in compliance with
SRC
Rule 34.1-2.

A.
Orders of clients, or transactions to be undertaken on behalf of
clients,
shall have in all cases priority over orders for the account of the
registered
person, and otherwise comply with SRC Rule 34.1-2 where the Broker is a
Member of an Exchange.

B.
A registered person shall, where he has aggregated an order for a
client
with an order for another client, or with an order for his own account,
give priority to satisfying orders of clients, in any subsequent
allocation,
if all orders can not be filled.

C.
A registered person shall not deal in any securities for himself or for
any account in which he has an interest based upon advance knowledge he
possesses of pending transactions for or with clients or any other non
public information, the disclosure of which would be expected to affect
the price of such securities and violate Section 27 of the Code
(insider trading prohibition).

D.
A registered person who withdraws in whole or in part from providing
any
investment or related service shall ensure that affected clients are
promptly
notified of such action and that any business which remains outstanding
is promptly completed or transferred to another registered person in
accordance
with SRC Rule 29 and any instruction of the affected clients.

ii.
Conflicts of interest: Where a registered person has a material
interest
in a transaction with or for a client, or a relationship which gives
rise
to an actual or potential conflict of interest in relation to such
transaction,
he shall neither advise, nor deal in relation to the transaction unless
he has disclosed that material interest or conflict to the client and
has
taken all reasonable steps to ensure fair treatment of the client.

iii.
Client assets: A registered person shall, in the handling of client
transactions
and assets, act to ensure that client assets are accounted for properly
and promptly and comply with SRC Rule 52.1-10. Where the registered
person,
or a third party on behalf of the registered person, is in possession
or
control of client positions or assets, the registered person
shall
ensure that client positions or assets are adequately safeguarded.

c.
Compliance. - A registered person shall comply with all regulatory
requirements applicable to the conduct of his business activities so as
to promote the best interest of clients and the integrity of the market.

i.
A registered person shall comply with the Code,
rules and regulations adopted thereunder, and rules of any Exchange,
clearing
agency, or other SRO, of which he is a member of or participant in.

ii.
A registered person shall have a policy, which has been communicated to
employees in writing, on whether employees are permitted to deal for
their
own accounts in securities. If employees are permitted to deal, the
conditions
on which they may do so, including those imposed under SRC Rule 34.1-2,
shall be set out in writing and communicated to each employee.

iii.
A registered person shall ensure that complaints from clients relating
to his business are adequately addressed in compliance with SRC Rule
30.2(g)
and sufficient records of such complaints are made in compliance with
SRC
Rule 52.1-9.

iv.
Pursuant to Section 51 of the Code,
a registered person shall at all times be responsible for the acts or
omissions
of his employees and agents in respect to the conduct of his business.

v.
All registered persons, as a condition of their registration, shall
undertake
in writing to uphold the Code,
and rules and regulations adopted thereunder.

2.
This Rule applies to all registered persons, although the Commission
recognizes
that certain requirements of the Code
and rules adopted thereunder may not be within the control of an
associated
person. In considering the conduct of an associated person, the
Commission
will consider such person’s level of responsibility within the Broker
Dealer
firm, and the level of control or knowledge he may have considering any
failure by his firm or persons under his supervision to follow the Code.

3.
Where the Commission makes an inquiry under Section 53 of the Code,
the Commission will refer to requirements set forth in this Rule in
considering
whether any person is guilty of a violation of this Code
and should remain registered.

SRC
Rule 30.2-2
Confirmation
of Customer Orders

1.
A Broker Dealer shall report to its customers all transactions entered
into for the customer's account, and to this end, shall send the
customer
a written confirmation of purchases and sales as promptly as possible
on
the day on which they are made. The confirmation shall be sent to the
customer
at the address provided on the Customer Account Information Form. An
employee
or salesman of a Broker Dealer shall not be authorized to accept a
confirmation
for or on behalf of a customer.

2.
The confirmation required by paragraph 1 above hereof shall contain at
least the following information:chanroblesvirtuallawlibrary

i.
a statement as to whether the Broker Dealer is brokering for a customer
or another Broker Dealer or is dealing for himself pursuant to Section
34.1 (a) to (d) of the Code
and SRC Rule 34.1-2;

ii.
that the Broker Dealer is controlled by, or controls, or is under
common
control with the issuer of such security if such be the fact; and

iii.
whether the transaction was solicited or unsolicited by the Broker
Dealer
or whether the transaction was executed pursuant to the exercise of
discretionary
power.

3.
The Commission may require a Broker Dealer to submit a report of his
commission
or remuneration to a particular transaction as it deems necessary.

SRC
Rule 30.2-3
Client
Agreement

1.
A Broker Dealer and employees who deal directly with clients shall
ensure
that a written agreement (hereinafter “Client Agreement”) is
entered
into with a client before any service is provided to that client.

2.
The Client Agreement shall be in a language understood by the client
and
employees who deal directly with clients shall explain to the client
the
contents of the agreement.

3.
A Client Agreement shall contain, among other things, the following
information:chanroblesvirtuallawlibrary

a.
full name and address of the client, as verified by a retained copy of
the identity card, relevant sections of the passport, business
registration
certificate, corporation documents, or any other official document
which
uniquely identifies the client;

b.
the full name and registered address of the Broker Dealer’s business;

c.
the Broker Dealer’s registration status with the Commission;

d.
undertakings by the Broker Dealer and the client to notify the other in
the event of any material change to the information provided in the
agreement;

e.
a description of the nature of services to be provided to or available
to the client, such as securities cash account, securities margin
account,
discretionary account, portfolio management, investment advice,
derivatives
trading;

f.
a description of any remuneration (and the basis for payment) that is
to
be paid by the client to the Broker Dealer, such as commission,
brokerage,
and any other fees and charges;

g.
a statement indicating the circumstances under which the Broker Dealer
will be acting as principal in relation to the client and that in all
other
circumstances the Broker Dealer will be acting as agent for the client;

h.
if the Broker Dealer is acting as a Dealer in relation to securities
and
is a member of an Exchange, a statement explaining the application of
Section
34 of the Code,
and if the client specifically authorizes the Dealer to pledge the
client’s
securities or subject such securities to liens of third parties, the
client
faces a loss of such securities;

i.
if margin or short selling facilities are to be provided to the client,
details of margin requirements, interests charges, margin calls, and
the
circumstances under which a client’s position may be closed without the
client’s consent; and

j.
risk disclosure statement as set forth in “Annex D”.

4.
A registered person shall ensure that he complies with his obligations
under this rule and the Client Agreement and that the Client Agreement
does not operate to remove, exclude or restrict any rights of a client
or obligations of a Broker Dealer under the Code.

5.
A Broker Dealer shall not effect a transaction on behalf of a client
unless
before the transaction is effected the client, or a person designated
by
the client, specifically authorizes the transaction, or the client has
authorized in writing the Broker Dealer to effect transactions on
behalf
of the client without the client’s specific authorization. If the
Broker
Dealer has obtained such an authorization, the Client Agreement shall
specify
that the account is a discretionary account.

SRC
Rule 30.2-4
Suitability
Rule

1.
In recommending to a customer the purchase, sale or exchange of any
security,
a Broker Dealer or an associated person or salesman of a Broker Dealer,
shall have reasonable grounds for believing that the recommendation is
suitable for such customer upon the basis of the facts disclosed by
such
customer as to his other security holdings and as to his financial
situation
and needs.

2.
Except as provided in SRC Rule 52.1-6, prior to the execution of a
transaction
recommended to a customer, a Broker Dealer shall execute a customer
account
information form which complies with SRC Rule 52.1-6.

SRC
Rule 30.2-5
Commissions
and Charges for Services Performed by a Broker Dealer

1.
Charges by a Broker Dealer for services performed, including:chanroblesvirtuallawlibrary

a.
miscellaneous services such as collection of monies due for principal,
dividends or interest;

b.
exchange or transfer of securities; and

c.
appraisals, safekeeping or custody of securities, and other
services,
shall be reasonable.

2.
All Broker Dealers shall file a schedule of their minimum commission
rates
with the Commission. No discounts and/or rebates shall be permitted
from
such minimum rates.

SRC
Rule 30.2-6
Supervision

1.
The management of every Broker Dealer shall establish and maintain an
appropriate
and effective compliance function within the firm which is independent
of all operational and business functions, and which reports directly
to
management. The management shall ensure that the Associated Person/s
performing
the compliance function possesses sufficient training and experience in
securities regulation matters and an understanding of the securities
activities
of the firm to enable them to effectively execute their duties and such
person is registered with the Commission as an Associated Person.

2.
Associated Persons shall be responsible for maintaining a system to
supervise
the activities of all persons employed by the Broker Dealer who are
directly
or indirectly related to the conduct of its securities
business.
The supervisory system shall be reasonably designed to achieve
compliance
with the Code
and rules and regulations adopted thereunder, with the rules of any
self
regulatory organization which the Broker Dealer is a member of or
participant
in, other applicable laws, and the Broker Dealer’s own internal
policies
and procedures. Final responsibility for proper supervision shall
rest with the Broker Dealer firm. A firm’s supervisory system shall
include
at least the following:chanroblesvirtuallawlibrary

a.
the establishment and maintenance of written supervisory procedures;

b.
the designation of one or more Associated Persons with the authority
and
responsibility to carry out the supervision of each type of business in
which it engages;

c.
the titles, registration status and locations of the required
Associated
Person/s and the responsibilities of each Associated Person as these
relate
to the types of business engaged in;

d.
written documentation to prove that all Associated Persons are
qualified
by virtue of experience or training to carry out their assigned
supervisory
responsibilities;

e.
written documentation to prove that each person engaged in securities
transactions,
either collectively or individually, no less than annually has
participated
in an interview or meeting conducted by the Associated Person/s
designated
by the firm at which compliance matters relevant to the activities of
these
persons are discussed. There shall be prompt notification in writing to
each such person of new or modified compliance obligations;

f.
establishment of an effective management and organizational structure
which
ensures that the operations of the business are conducted in a sound,
efficient
and effective manner; and

g.
establishment, maintenance and enforcement of policies and procedures
to
ensure the proper handling of complaints from clients and that
appropriate
remedial action is promptly taken. Where possible, complaints should be
investigated by the Associated Person performing the compliance
function
who is not directly involved in the subject matter of the complaint.
Where
a complaint is not remedied promptly, the client shall be advised of
any
further steps which may be available to the client under the law.

3.
Associated Persons shall promptly report to management all occurrences
of material non-compliance by the firm or its staff with legal and
regulatory
requirements, as well as with the firm’s own policies and procedures.
Management
shall then promptly notify any self regulatory organization which such
Broker Dealer is a member or participant in and the Commission of
occurrences
of material non-compliance by the firm or its staff with relevant legal
and regulatory requirements.

SRC
Rule 30.2-7
Internal
Training Program

1.
Every Broker Dealer shall establish, implement and maintain a
reasonably
comprehensive system of training towards:chanroblesvirtuallawlibrary

a.
ensuring the continuous improvement in critical areas of its principal
activities and operations; and

b.
enhancing the technical knowledge of its employees to enable them to
understand
the operational and internal control policies and procedures of that
Broker
Dealer and all applicable legal and regulatory requirements.

2.
Such system of training shall be properly documented in a manual form
which
shall:chanroblesvirtuallawlibrary

a.
set out details of the training programs which the Broker Dealer
proposes
to implement; and

b.
be regularly updated in line with the development in the securities
industry.

SRC
Rule 30.2-8
Block
Sale

1.
Except with respect to transactions which are subject to a mandatory
tender
offer under Section 19 of the Code
and SRC Rule 19.1 adopted thereunder, a Broker Dealer may engage in
block
sales on an Exchange, and an Exchange may execute block sales, provided
that:chanroblesvirtuallawlibrary

a.
no order shall be executed by the Exchange at a price inferior to the
best-bid-offer;

b.
all existing bids and offers are satisfied before a transaction can
occur
that establishes a new price;

c.
such transaction complies with Exchange rules, which have been approved
by the Commission, regarding block sales; and

d.
no later than one business day after the date such transaction has been
executed, the Exchange provides the Commission with written
notification
that a block sale has occurred, and the price and number of shares
subject
to such transaction.

2.
A block sale shall mean a matched trade that does not go through the
automated
order matching system of an Exchange trading system but instead has
been
prearranged by and among the Broker Dealer’s clients and is then
entered
as a done deal directly into the trading system.

Every
Exchange, clearing agency, Broker Dealer, transfer agent, other self
regulatory
organization, and every other person required to register under the Code
(hereinafter “registered person”) shall immediately report to
the
Commission and any person deputized by the Commission pursuant to
Section
5(h) of the Code,
the names of their owners/stockholders, members, participants, and
clients,
and other related information in its or his possession, upon order of
the
Commission, or as required by the rules of a self regulatory
organization
in which he is a member or participant, either in pursuance of an
investigation,
as part of a surveillance procedures, and/or in compliance with other
pertinent
laws.

SRC
Rule 31
Commission
Role in Development of Securities Market Professionals

1.
The Commission shall periodically meet with organizations and
associations
of securities market participants and private educational and research
institutions to discuss new regulatory developments and related
compliance
issues.

2.
In coordination with such organizations, associations and institutions,
the Commission shall help facilitate the organization of, and
participate
in, workshops on regulatory requirements.

3.
The Commission shall encourage all securities market participants to
participate
in the continued development of the securities market through such
organizations,
associations and institutions.

No
Broker Dealer shall effect any transaction in any security in an
Exchange,
unless such Exchange and the securities listed therein are registered
under
the Code
or exempt from registration pursuant to Sections 9 and 10 thereof.

SRC
Rule 32.2(a) –2
Best
Execution

In
any transaction for or with a customer, a Broker Dealer shall use
reasonable
diligence to ascertain the best available price for the security and
buy
or sell at that price so that the resultant price to the customer is as
favorable as possible under the prevailing market conditions.

SRC
Rule 33.1
Registration
of Exchange

1.
An application for registration as an Exchange shall be filed on SEC
Form
33 and be accompanied by the statements and exhibits prescribed to be
filed
under Section 33 of the Code: Provided, however, an Exchange
may
also apply for registration as a Self-Regulatory Organization under
Section
40 of the Code
at the same time on SEC Form 33-SRO. An application on SEC Form 33-SRO
shall also be accompanied by the statements and exhibits prescribed
under
Section 40 of the Code.

2.
An amendment to such application shall be made in duplicate on SEC Form
33-A, and each amendment shall be dated and numbered in the order of
filing.

3.
No later than seven (7) days after the discovery that any information
in
the statement, any exhibit, or any amendment was inaccurate when filed,
an Exchange shall file with the Commission an amendment correcting such
inaccuracy.

4.
Whenever the number of changes to be reported in an amendment, or the
number
of amendments filed, are so great that the purpose or clarity of the
disclosure
will be promoted by the filing of a new complete statement and
exhibits,
an Exchange may, at its election, or shall, upon request of the
Commission,
file as an amendment a complete new statement together with all
exhibits
which are prescribed to be filed in connection with SEC Form 33.

SRC
Rule 33.2(c)
Ownership
of an Exchange

1.
An Exchange organized as a stock corporation may be owned and
controlled
by another juridical person (“Exchange Controller”), based on
the
following terms and conditions, to ensure that such ownership will not
negatively impact the Exchange’s ability to effectively operate in the
public interest:chanroblesvirtuallawlibrary

a.
The Exchange Controller shall become registered with the Commission as
a Self Regulatory Organization under Section 40 of the Code and comply
with its duties regarding rulemaking under this section and rules
adopted
thereunder: Provided, however, that for purposes of Section 40
and
SRC Rule 39.1-1, the enforcement responsibilities of an SRO shall be
delegated
to the Exchange which is being controlled by the Exchange Controller.

b.
The Board of an Exchange Controller shall include in its composition,
the
president of the Exchange Controller, and unless the Commission
otherwise
agrees to a different governance structure based on findings that the
Exchange
Controller can operate the Exchange in the public interest and that the
Exchange can effectively operate as an SRO, no less than fifty one
(51%)
percent of the remaining members of the Board shall be comprised of
three
independent directors and persons who represent the interest of
issuers,
investors and other market participants who are not associated with any
Broker Dealer or member of the Exchange controlled by the Exchange
Controller,
for a period of two (2) years prior to his/her appointment. No officer
or employee of a Broker Dealer, its subsidiaries or affiliates or
related
interests may become an independent director.

c.
No person shall beneficially own or control, directly or indirectly,
more
than five percent (5%) of the voting rights of the Exchange Controller
and no industry or business group shall beneficially own or control,
directly
or indirectly, more than twenty percent (20%) of the voting rights of
the
Exchange Controller; Provided that pursuant to paragraph 3 below, the
Exchange
Controller shall disclose the names of its beneficial owners, their
business
or industry affiliation, and share ownership to the Commission and, no
less than once a month, update such disclosure.

d.
An Exchange Controller shall obtain prior Commission approval regarding
share ownership or any other investment in any clearing agency, other
securities
related business, or any other non-related business.

2.
For purposed of Section 33 (c) of the Code, an industry group shall
include
the following sectors which are based on the Philippine Standard
Industrial
Classification Code:chanroblesvirtuallawlibrary

i.
Agriculture, Hunting, Forestry, Fishing, Mining and Quarrying;

ii.
Manufacturing;

iii.
Electricity, Gas, Water Supply, and Construction;

ii.
Wholesale and Retail Trade, Hotels and Restaurants;

iii.
Transport, Storage and Communications;

iv.
Banking and other Financial Institutions;

v.
Brokers and Dealers;

vi.
Compulsory Social Security (Government);

vii.
Real Estate including leasing; and

viii.
Education, Health, Social Work and other community, social and personal
services.

3.
To insure diversification of Exchange ownership or where the Exchange
is
owned by an Exchange Controller, that Exchange Controller, the
Commission
may consolidate different industry or business groups into one group or
divide one group into several groups or redesignate the industry
classification
chosen by a business group: Provided, however that prior to the
sale of shares of an Exchange or Exchange Controller to any person, the
Exchange or Exchange Controller shall disclose in writing to the
Commission
the proposed ownership to ensure compliance with ownership
restrictions.
No shares of an Exchange or Exchange Controller may be transferred
without
Commission approval of such transfer.

4.
Where any ownership restrictions set forth in this rule are exceeded
and/or
violated, the Commission may order divestment of such excess ownership.
Until such ownership is divested, a person violating this restriction
shall
be barred from exercising his voting rights thereunder.

SRC
Rule 33.2(d)-1
Protection
of Customer Accounts in Case of Business Failure of an Exchange Member

Where
the Commission has ordered an Exchange to take over the operations of a
member firm whose financial condition has so deteriorated that it can
not
readily meet the demands of its customers for the delivery of
securities
and/or payment of sales proceeds (hereinafter Failed Member Firm), an
Exchange
shall:chanroblesvirtuallawlibrary

1.
Suspend such Failed Member Firm’s membership, immediately arrange for
another
Member to take over the outstanding contracts relating to securities
and
simultaneously notify the Commission of such suspension and take-over;

2.
Promptly notify customers of the Failed Member that their accounts have
been transferred to another Member, and provide such customers with the
opportunity to re-transfer their accounts to another Member of their
choice;

3.
Settle the Failed Member’s liabilities to customers through the sale of
the Member’s seat or trading rights, liquidation of paid up capital
and/or
oversee payment of claims made against the surety bond;

4.
Where after such settlement, there are outstanding liabilities to
customers
of the Failed Member, inform that Member’s customers that the matter
has
been transferred to a Trust Fund accredited under Section 36.5 of the Code
to which such Failed Member is a Member or Participant and procedures
for
claiming compensation for losses which have not been satisfied; and

5.
Simultaneously inform that Accredited Trust Fund of such take-over and
any outstanding liabilities of the Failed Member firm remaining after
liquidation.

l.
A Member Broker of an Exchange shall not effect any transaction on such
Exchange for its own account, the account of an associated person, or
an
account with respect to which an associated person exercises investment
discretion, unless:chanroblesvirtuallawlibrary

a.
The transaction is of a kind described in paragraphs (a) through (d) of
Section 34.1 of the Code and is effected in accordance with applicable
rules and regulations adopted thereunder; or

b.
The transaction is effected in compliance with the following conditions:chanroblesvirtuallawlibrary

i.
the initiating Member Broker transmits an order for the transaction to
another Member Broker (executing Member Broker) for execution: Provided
however that the order may only be transmitted to one executing
Member
Broker;

ii.
the executing Member Broker is not an affiliated person of the
initiating
Member Broker;

iii.
the order ticket states that the order is for the account of the
initiating
Member Broker, associated person, other employees, owners, officers, or
directors of an Initiating Member Broker, or discretionary account on
behalf
thereof (collectively referred to as “Member Orders");

iv.
the initiating Member Broker retains a copy of the order ticket with
the
date and time of its transmittal, which shall be time stamped thereon;

v.
in compliance with SRC Rule 52.1-7, the executing Member Broker dates
and
time stamps the order ticket to reflect the time that he received the
order
from the Initiating Member Broker and the time that the order was
transmitted
for execution;

vi.
the executing Member Broker gives priority to the execution of
non-Member
orders over Member Orders at the same price;

vii.
neither the initiating Member Broker nor an associated person of the
initiating
Member Broker participates in the execution of the transaction at any
time
after the order for the transaction has been transmitted to the
executing
Member Broker;

viii.
in the case of a transaction effected for an account with respect to
which
the initiating Member Broker or an associated person of the initiating
Member Broker exercises investment discretion, neither the initiating
Member
Broker nor any associated person thereof retains any compensation in
connection
with effecting the transaction unless:chanroblesvirtuallawlibrary

A.
the person or persons authorized to transact business for the account
have
expressly provided otherwise by written contract with the initiating
Member
Broker or the associated person thereof; and

B.
the initiating Member Broker or the associated person furnished at
least
annually to the person or persons authorized to transact business for
the
account, a statement setting forth the total amount of compensation
retained
by the initialing Member Broker or any associated person thereof in
connection
with effecting transactions for the account in the period covered by
the
statement, which amount shall be exclusive of all amount paid to others
during the period for services rendered in effecting such transactions;

ix.
the initiating Member Broker and the executing Member Broker retain all
order tickets in chronological order for a period of six (6) years; and

x.
the initiating Member Broker and the executing Member Broker retain in
chronological order for a period of six (6) years records in hard or
soft
copy of all orders executed by them containing their date, time, price,
and other significant details.

2.
Any Exchange to which such initiating Member Broker is a member and
through
which any such orders are transmitted for execution:chanroblesvirtuallawlibrary

a.
undertakes in writing, under oath, that its trading system will be able
to prioritize orders in accordance with this Rule; or

b.
obtains a contrary certification from its software vendor and
Commission
approval of an alternate means to ensure compliance.

3.
For purposes of this Rule:chanroblesvirtuallawlibrary

a.
Affiliated person of a Member Broker is any person who (i) controls, is
controlled by, or is under common control with the Member Broker, (ii)
has officers, directors, or associated persons who are also officers,
directors,
or associated persons of the Member Broker, (iii) directly or
indirectly
controls more than ten percent (10%) of the equity interest in the
Member
Broker, or (iv) has more than ten percent (10%) of its equity interest
owned by the Member Broker and/or associated persons of the Member
Broker.

b.
A Member Broker effects a securities transaction when it performs any
function
in connection with the processing of that transaction, including, but
not
limited to, (1) transmission of an order for execution, (2) execution
of
the order, (3) clearance and settlement of transaction, and (4)
arranging
for the performance of any such function.

c.
Compensation in connection with effecting the transaction refers to
compensation
directly or indirectly received or calculated on a transaction-related
basis for the performance of any function involved in effecting
securities
transactions.

4.
A Member Broker can have a subsidiary or affiliate which is a Member
Dealer,
and/or non Member Broker Dealer, and/or Investment House, provided that
there are no interlocking officers or directors.

5.
Exchange Member Associated Persons may purchase securities only through
another non-affiliated Broker Dealer or Investment House, provided that
they obtain the permission of the Member Broker that they are
associated
with and inform such Broker that they have opened such account, and
provided
that the Broker or Investment House through whom they transact business
agrees to send duplicate account statements to the Associated Person’s
Member Broker. If the account is with a non-Member Broker or Investment
House, such associated person shall receive permission from that broker
or Investment House for access to that account by the Exchange.

6.
Member Broker employees, other than Associated Persons, may purchase
securities
only through their Employer Member Broker.

7.
Owners, officers and Directors of Member Brokers may purchase
securities
through their associated Member Broker or through another Broker or
Investment
House; provided, however, that where securities are purchased
through
another Broker or Investment House, they obtain the permission of the
Member
Broker whom they are associated with and inform such Member Broker that
they have opened such account, and provided that the Broker or
Investment
House through whom they transact business agrees to send duplicate
account
statements to the owner, officer or director’s associated Member
Broker.
If the account is with a Non-Member Broker or Investment House, such
owner,
officer or director shall receive permission from that Broker or
Investment
House for access to that account by the Exchange.

8.
A Member Broker, and any other Broker or Investment House, with
securities
accounts of Member Brokers, and/or their associated persons, other
employees,
owners, directors and/or officers, including discretionary accounts on
behalf thereof, for transactions executed in accordance with paragraph
1.B of this Rule, shall, when receiving and executing such
transactions,
identify such accounts as employee, owner, director, officer or Member
broker accounts, or discretionary accounts on behalf thereof (along
with
the name of the related Member Broker), and require the firm’s
responsible
Associated Person or, in the case of an Investment House a person
responsible
for compliance, to review such accounts on a daily basis.

9.
No Broker Dealer shall execute for its own account, or the account of
its
customers, listed securities issued by an affiliated company prohibited
under Section 30.1 of the Code.

10.
For purposes of paragraph 9 of this rule, affiliated company means a
company
in which any director, president, vice president, manager, treasurer,
comptroller,
secretary, any other officer of trust and responsibility, or other
control
person is also a stockholder, director, associated person, or salesman,
or a clerk of any Broker Dealer, or a relative of any of the foregoing
within the fourth degree of consanguinity or affinity.

SRC
Rule 34.1-3
Segregation
of Functions (Chinese Walls)

1.
Any Broker Dealer which assumes more than one function whether as a
dealer,
adviser, or underwriter, or which engages in market making
transactions,
shall maintain proper segregation of those functions within the firm to
prevent:chanroblesvirtuallawlibrary

a.
the flow of information between the different parts of its organization
which perform each function; and

b.
any conflict of interest which may result.

2.
For purposes of this Rule, information means information:chanroblesvirtuallawlibrary

a.
of a specific nature which has not been made public;

b.
relating to one or more public companies or any securities of a public
company; and

c.
which, if it were made public, would likely affect the market price of
the securities.

3.
A Broker Dealer shall at all times ensure that its trading functions
and
back-office settlement functions are properly segregated and shall
establish
written procedures to ensure compliance with this Rule.

SRC
Rule 36-4.1
Registration
of Transfer Agents

1.
No person shall act as a transfer agent for an issue which is listed on
an Exchange without being registered with the Commission in accordance
with the provisions of this Rule.

2.
To apply for registration under this Rule, a transfer agent shall:chanroblesvirtuallawlibrary

a.
be a corporation or a partnership;

b.
have paid-up capital of at least P 1,000,000.00, and

c.
have a partner or officer who is a certified public accountant.

3.
An application for registration as a transfer agent, or an amendment to
any such application, shall be filed with the Commission on SEC Form
36-TA,
in accordance with the instructions contained therein.

4.
If any of the information reported on SEC Form 36-TA becomes
inaccurate,
misleading, or incomplete or requires updating for any reason, such as
changes in operating procedures and/or the list of directors and
officers,
the registrant shall file an amendment within seven (7) days after the
date on which the information in the application became inaccurate,
misleading,
or incomplete.

5.
After reviewing an application for registration as a transfer agent, or
an amendment thereto, the Commission shall, by order:chanroblesvirtuallawlibrary

a.
grant registration or approve the amendment; or

b.
deny registration or the amendment, place limitations on the
activities,
functions or operations of, suspend or revoke registration, if the
Commission
finds, after notice and opportunity for hearing:chanroblesvirtuallawlibrary

i.
that such order is in the public interest;

ii.
that the registrant does not meet applicable qualifications;

iii.
the application is incomplete, inaccurate or misleading; or

iv.
that the transfer agent has been found to:chanroblesvirtuallawlibrary

A.
be insolvent or not in sound financial condition;

B.
have violated or not have complied with the applicable provisions of
the
Code or the rules and regulations adopted thereunder, or any order of
the
Commission;

C.
have engaged in or be engaged in or about to engage in fraudulent
transactions;

D.
be in any other way dishonest or not of good repute;

E.
have not conducted its business in accordance with law or be engaged in
a business that is illegal or contrary to government rules and
regulations;

F.
have an officer, member of the board of directors or principal
shareholder
who is disqualified to be such an officer, director or principal
shareholder;

G.
have a backlog of share certificate transfers which indicates an
inability
of the registrant to fulfill its responsibilities as a transfer agent;

H.
have repeatedly or materially failed to comply with its procedures or
those
of a registered clearing agency; or

I.
have filed an application for registration or an amendment thereto
which
is incomplete or inaccurate in any material respect or which includes
any
untrue statement of a material fact or omits to state a material fact
required
to be stated therein or necessary to make the application or amendment
not misleading.

6.
A transfer agent can not be the auditor of an issuer for whom it acts
as
transfer agent.

7.
The procedures of a transfer agent are binding on and enforceable
against
issuers for which they act, registered securities holders and
transferees
who present securities for transfer. To minimize the issuance and
movement
of and to facilitate other dealings with those securities eligible to
the
operations of a registered clearing agency, a transfer agent and
registered
clearing agency shall jointly formulate and abide by written procedures
addressing certificated and uncertificated securities issuance,
transfers,
cancellations, registration, confirmation and reconciliation of
positions
in securities, audit, replacement of lost securities, signature
guarantees,
delivery processes and turnaround times.

8.
Every transfer agent registered pursuant to this Rule shall file the
appropriate
registration renewal form within thirty (30) days from June 1 of every
year and pay to the Commission the prescribed annual renewal fee. The
prescribed
fee shall be collected by the Commission upon filing of the application.

If
such fee is not paid or the registration renewal form is not filed as
required,
the registration of such transfer agent shall be suspended or
terminated
as the case may be.

SRC
Rule 36-4.2
Reports
from Transfer Agents

1.
Annual
Report. - Every registered transfer agent shall file with the
Commission
an annual report on SEC Form 36-AR in accordance with the instructions
contained therein within 105 days after the end of its fiscal year.
Reports
filed on SEC Form 36-AR shall be deemed to satisfy Section 141 of the
Corporation
Code of the Philippines.

2.
Exception
Report to Commission. - A transfer agent shall provide to the
Commission
within seven (7) days of the occurrence of any of the following events,
a report detailing the reasons and circumstances for:chanroblesvirtuallawlibrary

a.
any delay in the turnaround or processing of an issue, transfer or
replacement
of a security;

b.
any discrepancy between its records and those of the registered
clearing
agency, if applicable;

c.
any loss of securities reported to it; and/or

d.
the termination of its function as a transfer agent for a particular
security.

4.
Periodic
Reporting to Issuer. - At regular intervals within each and every
year
and upon request by the issuer, a transfer agent shall supply the
issuer,
for whom it acts in that capacity, with the list of holders of its
securities,
as shown by the register of holders of securities, and the changes to
the
register of transfers, showing the name and registered address of, and
the number or face value of the securities held by each such holder and
supply any other statements, lists, entries, information and material
concerning
issues, transfers and cancellations of securities.

5.
Complaint
Log. - A record of all claims and complaints made to a transfer
agent
shall be kept by it at its principal office. The record shall contain:chanroblesvirtuallawlibrary

a.
the name of the security holder and a description of the security;

b.
the date of the complaint or claim and a complete description thereof;
and

c.
the steps taken by the transfer agent, the manner in which the
complaint
or claim is resolved and any subsequent action taken or to be taken by
the holder or the transfer agent.

The
record shall be open for inspection during normal business hours by the
Commission and by any issuer with respect to securities issued by it.

SRC
Rule 36-4.3
Records
Retention by Transfer Agents

1.
In addition to the records required to be maintained pursuant to
Section
74 of the Corporation
Code of the Philippines, every transfer agent shall make and retain
for a period of six (6) years the following books and records relating
to its transfer agent activities:chanroblesvirtuallawlibrary

c.
complaint log as required to be maintained under SRC Rule 36-4.2.5;

d.
reports to the issuers for whom the firm acts as transfer agent as
required
under SRC Rule 36-4.2.3; and

e.
Annual report on SEC Form 36-AR.

2.
Every transfer agent shall make available any or all of its books and
records
upon request of an authorized representative of the Commission. Failure
to do so shall result in an immediate suspension of the transfer
agent's
registration. Such suspension shall continue until such time as the
books
and records are made available to the Commission.

SRC
Rule 36.4(a)-1
Trust
Funds for Broker Dealer Customers

1.
A trust fund established to compensate customers for the extraordinary
losses or damage they may suffer due to the business failure or fraud
or
mismanagement of a Broker Dealer shall be registered as an Accredited
Trust
Fund under this Rule.

2.
An application for registration shall be filed on SEC Form 36-TF and
contain
the following supporting documents:chanroblesvirtuallawlibrary

a.
data on its organization, rules of procedure and
membership/participation;

b.
copies of its rule; and

c.
list of directors and officers and a list of their affiliations.

3.
Business failure shall be established upon a determination by the
Exchange,
where the Broker Dealer is an Exchange member, or the Commission, where
the Broker Dealer is not an Exchange member, that the financial
condition
of the Broker Dealer has so deteriorated that the Broker Dealer can not
readily meet the demands of its customers for the delivery of
securities
and/or the payment of sales proceeds: Provided, however, that
such
determination shall not be dependent upon a judicial declaration of
insolvency.

4.
As a condition of their registration, all Broker Dealers shall be a
member
of or participant in an Accredited Trust Fund.

5.
An Accredited Trust Fund shall establish a Customer Protection Fund
(the
“Fund”).
All amounts received by the Accredited Trust Fund, except amounts set
outside
for operating expenses, shall be deposited into the Fund which shall
serve
as trustee in compliance with general rules of trust.

b.
Assessments to be imposed on members/participants and procedures for
collecting
such assessment;

c.
Borrowing by the Fund;

d.
Investment of Fund assets;

e.
Procedures for paying customers for the extraordinary losses or damage
they may suffer due to business failure or fraud or mismanagement of
the
Broker Dealer;

f.
Role and duty of the trust fund as trustee; and

g.
The composition of the trust fund’s board of Directors.

7.
All rules of the Accredited Trust Fund, including amendments thereto,
shall
be approved by the Commission prior to becoming effective.

8.
If the Commission or any Exchange is aware of facts which lead it to
believe
that the financial condition of a Broker Dealer, including an Exchange
Member, has so deteriorated and the Broker Dealer has difficulties
meeting
the demands of its customers for the delivery of securities and/or the
payment of sales proceeds, it shall immediately notify the Accredited
Trust
Fund; provided, however, where such notification involves an
Exchange
member, the Exchange shall simultaneously notify the Commission.

9.
Every Exchange, or other SRO responsible for monitoring the financial
condition
of Members and/or Participant Broker Dealer shall file with the
Accredited
Trust Fund copies of financial reports submitted by such Broker Dealers.

SRC
Rule 38.1
Definition
of “Independent Director”

1.
As used in Section 38 of the Code,
independent director means a person who, apart from his fees and
shareholdings,
is independent of management and free from any business or other
relationship
which could, or could reasonably be perceived to, materially interfere
with his exercise of independent judgement in carrying out his
responsibilities
as a director in any corporation that meets the requirements of Section
17.2 of the Code
and includes, among others, any person who:chanroblesvirtuallawlibrary

a.
Is not a director or officer of the corporation or of its related
companies
or any of its substantial shareholders (other than as an independent
director
of any of the foregoing);

b.
Is not a substantial shareholder of the corporation or of its related
companies
or any of its substantial shareholders;

c.
Is not a relative of any director, officer or substantial shareholder
of
the corporation, any of its related companies or any of its substantial
shareholders. For this purpose, relatives includes spouse, parent,
child,
brother, sister, and the spouse of such child, brother or sister;

d.
Is not acting as a nominee or representative of any director or
substantial
shareholder of the corporation, any of its related companies or any of
its substantial shareholders;

e.
Has not been employed in any executive capacity by that public company,
any of its related companies or by any of its substantial shareholders
within the last five (5) years;

f.
Is not retained as professional adviser by that public company, any of
its related companies or any of its substantial shareholders within the
last five (5) years;

g.
Is not retained as professional adviser, by that public company, any of
its related companies or by any of its substantial shareholders, either
personally or through his firm; or

h.
Has not engaged and does not engage in any transaction with the
corporation
or with any of its related companies or with any of its substantial
shareholders,
whether by himself or with other persons or through a firm of which he
is a partner or a company of which he is a director or substantial
shareholder,
other than transactions which are conducted at arms length and are
immaterial.

When
used in relation to a company subject to the requirements of this Rule
and Section 38 of the Code:chanroblesvirtuallawlibrary

a.
Related company means another company which is: (a) its holding
company,
(b) its subsidiary, or (c) a subsidiary of its holding company; and

b.
Substantial shareholder means any person who is directly or
indirectly
the beneficial owner of more than ten percent (10%) of any class of its
equity security.

1.
Applicability. All organized Exchanges shall be subject to these
procedures
and requirements set forth in this Rule.

2.
Definitions. For purposes of this Rule:chanroblesvirtuallawlibrary

a.
Organized Exchange or Exchange means a registered Exchange, whether or
not registered as an SRO under the Code.

b.
Participant refers to any person who has been approved to use the SRO’s
services and facilities but is not a member therein.

c.
Securities laws refers to the Code and rules, regulations and orders
issued
by the Commission.

d.
SRO means a Self Regulatory Organization which is an organized Exchange.

e.
SRO rule refers to the constitution, articles of incorporation, by-laws
and rules, or instruments corresponding to the foregoing and such
policies,
practices and interpretations of the SRO, other than those designated
by
the SRO as constituting a policy, practice or interpretation of an
existing
rule or establishing or concerning solely matters of SRO administration
under Section 4(c) of this Rule.

3.
SRO Rulemaking

a.
Subject to Commission approval and pursuant to the procedures set forth
herein, an SRO’s power to adopt and amend rules shall also include the
power to repeal existing rules, implement such rules and provide
interpretative
guidance to aid in compliance.

b.
An SRO shall adopt comprehensive rules governing its organization and
governance,
qualifications and rights of shareholders, listing of securities,
trading
of securities, settlement of contracts, qualification of members and
other
participants, ethical conduct of members and other participants,
supervision
and control of members, financial and operational responsibility of
members,
and discipline of members and other participants.

4.
Commission Review Procedures

a.
An SRO shall submit to the Commission for prior approval any proposed
rule
or amendment thereto (hereinafter collectively referred to as
“proposal”),
together with a concise statement of the reason and effect of the
proposal.
If the Commission believes that such proposal is of “major
significance”,
at least thirty (30) days before approving such proposal, the
Commission
shall direct the SRO to publish the text of the proposal and a
statement
of the reasons and effect in a newspaper of general circulation or
by some other means to guarantee the public circulation thereof, and
shall
afford interested persons an opportunity to submit written data, views
and arguments, provided that comment period shall not exceed a period
of
twenty (20) days. The SRO shall file with the Commission a written
summary
of the comments received, along with responses thereto, no later than
thirty
(30) days after the end of the comment period. Where the comments cause
the SRO proposal to be changed in a material manner, a new review
period
shall be triggered.

b.
Except as provided in paragraph (c) below, within the later of sixty
(60)
days after submission of the proposal or summary of comments required
to
be filed with the Commission pursuant to paragraph (a) above, the
Commission
shall, by order, approve the proposal, or institute proceedings to
determine
whether the proposal should be disapproved. If the Commission does not
institute proceedings to disapprove the proposal within such period,
the
proposal may be declared effective by the SRO. If a proceeding is
instituted,
the Commission shall provide notice to the SRO of the proposed grounds
for disapproval, and an opportunity for hearing, at the conclusion of
which
the Commission shall grant or deny approval of the proposal. The
Commission
shall approve a proposal where it finds that the proposal is consistent
with the requirements of the securities law, and shall disapprove if it
does not make such findings. If the proceeding is not concluded within
ninety (90) days following its commencement, the proposal shall be made
effective by the SRO.

c.
Notwithstanding paragraph (b) above, a proposal may take effect within
ten (10) business days after its submission to the Commission if
designated
by the SRO as constituting a policy, practice or interpretation of an
existing
rule, establishing or concerning solely matters of administration of
the
SRO (e.g. setting of dues, fees and charges ) or such other matters as
the Commission by rule or order, may prescribe, unless the Commission,
within the ten (10) day period, provides written notice to the SRO of
its
determination to review such proposal for prior approval pursuant to
paragraphs
(a) and (b) above.

d.
Notwithstanding any other provision of this section, in an emergency
requiring
action for the protection of investors, the maintenance of fair and
orderly
markets, or the safeguarding of securities and funds, the SRO may
summarily
put into effect a proposal; provided however that the proposal
made
effective shall be promptly submitted to the Commission pursuant to
paragraph
(a) above.

e.
Commission directions regarding rulemaking

i.
The Commission may request in writing that the SRO effect on its own
behalf
specified changes in its rules and practices which are necessary or
appropriate
for the protection of investors, to insure fair dealing in securities
traded
on the SRO, insure fair administration of the SRO, conform SRO rules to
the requirements set forth in the securities law, or to otherwise
further
the purpose of the securities law on such matters as:chanroblesvirtuallawlibrary

1.
safeguards in respect of the financial responsibility of members and
adequate
provision against the evasion of financial responsibility through the
use
of corporate forms or special partnerships;

2.
supervision of trading practices;

3.
listing or delisting any security;

4.
hours of trading;

5.
manner, method and place of soliciting business;

6.
fictitious accounts;

7.
time and method of making settlements, payments and deliveries and of
closing
accounts;

8.
transparency of securities transactions and prices;

9.
fixing of reasonable rates of fees, interest, listing and other charges
but not rates of commission;

10.
minimum units of trading;

11.
odd-lot purchases and sales;

12.
minimum deposits on margin accounts; and

13.
supervision, auditing and disciplining of members or participants.

ii.
If after making such request in writing to the SRO, and after due
notice
of the reasons and effects of the proposed changes and opportunity for
a hearing, the Commission determines that the SRO has not made the
changes
so requested, the Commission may alter, abrogate, or supplement the
SRO’s
rules, with such changes to be made effective immediately upon adoption
by the Commission.

5.
Power over listed companies

The
SRO shall be solely responsible for processing and approving or
rejecting
applications for new listing of shares, suspension and de-listing of
listed
issues and imposition of sanctions on listed companies for violation of
SRO rules; provided, however, that such powers shall be
exercised
pursuant to SRO rules.

6.
Compliance and Surveillance

a.
An SRO shall establish a separate audit, compliance and surveillance
department/s,
overseen by at least one “independent” member of the Board of
Directors,
and one other non-broker member. Such department shall not be
subordinated
or otherwise controlled in its activity by the Exchange Board and shall
be responsible for carrying out the SRO’s enforcement role pursuant to
the securities law and the disciplining of participants, with findings
to be provided simultaneously to the Commission and Exchange Board
which
shall notify the Commission within forty five (45) days as to the
Board’s
decision.

b.
Absent reasonable justification or excuse, the SRO shall enforce
compliance
with provisions of the securities laws regulating brokers, dealers and
trading on the SRO and SRO rules by its members.

c.
An SRO shall enter into a Memorandum of Understanding with other SROs
to
clarify its oversight responsibilities over persons who are members of
or participants in more than one SRO and coordinate with other SROs to
ensure adequate oversight. Such plan shall be submitted to the
Commission
for approval under SRC Rule 39.1-6.

d.
An SRO shall monitor market conditions and trading activity to detect
violations
of the securities law and SRO rules:chanroblesvirtuallawlibrary

ii.
The SRO shall monitor compliance by listed companies with continuing
listing
obligations; provided however, primary oversight for compliance
with full disclosure regulation under the securities law shall remain
the
responsibility of the Commission.

e.
The Commission may, on its own initiative, monitor the market to ensure
that the SRO is fulfilling its SRO functions.

7.
Periodic Examinations

a.
The SRO shall examine members to determine whether they are in
compliance
with the securities law and SRO rules governing, among other things,
financial
responsibility, dealings with members of the public, back office
procedures,
trading practices, and supervision and shall submit to the
Commission
for review and comment its examination calendar for the year on or
before
the 15th of January of every year, provided that any amendment to the
calendar
shall be promptly provided to the Commission. This calendar shall be
treated
as confidential information. Periodic examination of each member firm
shall
be conducted without prior notice to the member firm.

b.
The SRO shall file with the Commission monthly reports of its periodic
examinations started and completed during the month, within ten (10)
days
after the end of each month, together with a summary of findings for
audits
completed. Periodic examinations of each member firm shall be made by
the
SRO pursuant to written procedures approved by the Commission. Where
deficiencies
are detected, the SRO shall either send a letter to the firm within
three
(3) business days of the completion of such examination requesting that
such deficiencies be corrected or, where such deficiencies evidence
violations
of the securities law, SRO rules and/or otherwise negatively reflect
upon
the firm’s integrity or solvency, initiate an investigation.

c.
The Commission may, on its own initiative, conduct periodic or parallel
examinations of members to validate the SRO’s findings and conduct
on-spot
audit inspections of the relevant SRO department to check if it is
fulfilling
its duties and responsibilities as an SRO.

8.
Investigations

a.
An SRO shall investigate suspected violations of the securities law and
SRO rules based on complaints, examination/audit findings or unusual
trading
activities and take disciplinary action, where appropriate, pursuant to
SRO rules.

c.
The SRO shall promptly notify the Commission of any investigation which
involves suspected violations of the securities law involving persons not
subject to the SRO’s jurisdiction, concerning the disclosure
obligations
of listed companies under the securities law, and/or involving fraud or
manipulation. The SRO shall cooperate with the Commission which shall
have
primary investigative authority over such suspected violations.

9.
Discipline of SRO Members and Participants

a.
An SRO shall discipline a member, including suspension or expulsion of
a member, if such person has been found to have been engaged in a
violation
of SRO rules or provisions of the securities law, including, but not
limited
to, illegal sales practices, financial and operational requirements,
trading
and floor related violations, and/or violation of SRO listing rules.

b.
In any disciplinary hearing by the SRO, other than a proceeding brought
pursuant to paragraph (c) below, the SRO shall bring specific charges,
provide notice to the member or participant charged, afford such person
charged with an opportunity to defend against the charges, and keep a
written
record of the proceeding. A determination to bring a disciplinary
sanction
shall be supported by a written statement of the offense, a summary of
the evidence presented and a statement of the sanction imposed.

c.
The SRO may summarily suspend a member or person associated with a
member
who has been expelled or suspended from another SRO, and/or suspend a
member
who the SRO finds to be in such financial or operating difficulty that
the member cannot be permitted to do business as a member with safety
to
investors, creditors, other members, or the SRO; provided, however that
the SRO immediately provides written notice to the Commission of the
action
taken. Any person aggrieved by a summary action pursuant to this
paragraph
shall be promptly afforded an opportunity for a hearing by the SRO in
accordance
with paragraph (b) above. The Commission, by order, may stay a summary
action on its own motion or upon application by any person aggrieved
thereby
if the Commission determines summarily or after notice and an
opportunity
for hearing (which may consist solely of the submission of affidavits
or
presentation of oral arguments) that a stay is consistent with the
public
interest and the protection of investors.

d.
The SRO shall promptly notify the Commission in written reports of any
disciplinary sanction imposed on any member or participant. Within
thirty
(30) days after receipt of such notice, any aggrieved person may appeal
to the Commission from, or the Commission on its own motion within such
period, may institute review of, the decision of the SRO, at the
conclusion
of which, after due notice and opportunity for hearing which may
consist
solely of review of the record before the SRO, the Commission shall
affirm,
modify or set aside the sanction. In such proceeding, the Commission
shall
determine whether the aggrieved person has engaged or omitted to engage
in the acts and practices as found by the SRO, whether such acts and
practices
constitute willful violations of the securities law or SRO rules,
whether
such provisions were applied in a manner consistent with the purposes
of
the securities law, and whether, with due regard for the public
interest
and the protection of investors, the sanction is excessive or
oppressive.

10.
SRO Discipline by the Commission

The
Commission may, if in its opinion such action is necessary or
appropriate
in the public interest or for the protection of investors, or otherwise
in furtherance of the purposes of the securities law, after due notice
and an opportunity for a hearing:chanroblesvirtuallawlibrary

a.
suspend for a period not to exceed twelve (12) months or revoke the
registration
of an SRO, or censure or impose limitations on the activities,
functions
and operations of the SRO as an SRO, if the Commission finds that the
SRO
has willfully violated or is unable to comply with any provision of the
securities law or SRO rules, or without reasonable justification or
excuse
has failed to enforce compliance therewith by a member or participant;

b.
take over the activities of an SRO pursuant to SRC rule 40.5.1;

c.
suspend for a period not exceeding twelve (12) months or to expel from
the SRO any member who is subject to an order of the Commission under
Section
29 of the Code or is found to have willfully violated any provision of
the securities law, or effected, directly or indirectly, any
transaction
for any person who such member had reason to believe was violating in
respect
of such transaction any of such provisions;

d.
remove from office or censure any officer or director of the SRO if it
finds that such officer or director has violated any provision of the
securities
law or the rules of such SRO, abused his authority or without
reasonable
justification or excuse, has failed to enforce compliance with any of
such
provisions; and/or

An
SRO shall submit the following reports to the Commission:chanroblesvirtuallawlibrary

a.
Monthly reports on dockets of examinations and investigations being
conducted,
containing the docket number, name of SRO examiner/investigator, how
audit/examination
originated (investor complaint, examination, surveillance), name of the
member or participant, including a listed company being
audited/investigated,
nature of the violations alleged, status, findings, sanctions imposed
and
other courses of action taken by the SRO relative thereto;

b.
Monthly reports on capital adequacy requirements by members;

c.
Quarterly reports on the result of the monitoring of trading of listed
companies and investigations conducted with respect thereto;

d.
Semi- annual report on the number of newly listed issues,
delisted/suspended
issues and reasons therefor, and the number, type and issuer of current
listed issues;

e.
Semi-annual report containing information on the number of investor
complaints
received, investigated, nature of claim, status and manner of
disposition;
and

f.
Such other information as may, from time to time, be required by the
Commission
from the SRO.

12.
SRO Relationship with Commission.

a.
In order to enhance investor protection and more effectively utilize
existing
resources, the Commission and SRO shall work towards a more harmonious
and cooperative relationship among their officers and personnel.
Commission
staff working in the area of Broker Dealer and market regulation and
corporate
disclosure shall meet with their SRO counterparts at least once a month
to discuss issues and concerns relating to the operation of the SRO as
an SRO. Minutes of such meetings shall be prepared and circulated to
SRO
management and Commissioners of the Commission. This monthly meeting
may,
at the discretion of the Commission and SRO, involve officials of the
Commission
and/or SRO, directors of the Commission and their SRO counterparts, or
technical working groups from both sides.

b.
The Commission and SRO shall work closely and try to coordinate their
media
campaigns on the securities industry to generate positive public
opinion
and increase investor confidence.

SRC
Rule 39.1-2
Registration
of Associations of Brokers and Dealers and Other Self Regulatory
Organizations

1.
An application for registration as an Association of Securities Brokers
and Dealers shall be filed on SEC Form 39-BD accompanied by copies of
the
statements and exhibits required to be filed thereunder under Section
40
of the Code and SEC Form 39-BD.

2.
Any other application for registration as a Self Regulatory
Organization
shall be filed on SEC Form 39 accompanied by the statements and
exhibits
required to be filed thereunder under Section 40 and SEC Form 39; provided,
however, that an application for registration as an Exchange and
SRO
shall file Form 33-SRO and an applicant for registration as a Clearing
Agency and SRO shall file SEC Form 42-SRO.

3.
Every Association of Securities Brokers and Dealers and other Self
Regulatory
Organizations (collectively referred to hereinafter as “SROs”)
shall
promptly, after the discovery of any inaccuracy in the registration
statement
or in any amendment or supplement thereto, file with the Commission an
amendment on SEC Form 39-A correcting such inaccuracy.

4.
Promptly after the close of each fiscal year, every registered SRO
shall
file with the Commission an annual return on SEC Form 39-AR including a
copy of its balance sheet as of the close of its fiscal year and its
income
and expense statement for such year. The annual return shall be signed
and attested, in the same manner as required in the case of the
original
registration statement.

5.
Amendments to the registration statement shall be filed, at least one
of
which shall be signed and attested, in the same manner as required in
the
case of an original registration statement. All amendments shall be
dated
and numbered in the order of filing. One amendment may include a number
of changes.

6.
In addition to the formal filing of amendments and the annual return,
every
registered SRO shall send to the Commission copies of any notices,
reports,
circulars, loose leaf instructions, riders, new additions, lists, or
other
records of changes covered by amendments or supplements when, as, and
if
such records are made available to members and/or participants of the
SRO.

1.
Any two or more Self Regulatory Organizations (SROs) may file with the
Commission a plan for allocating among SROs the responsibility to
receive
regulatory reports from persons who are members of or participants in
more
than one SRO, to examine such persons for compliance, or to enforce
compliance
by such persons, with the Code and rules and regulations adopted
thereunder,
and the rules of such SRO, and to carry out other specified regulatory
functions with respect to such persons.

2.
Any plan filed hereunder may contain provisions for the allocation
among
the parties of expenses reasonably incurred by the SRO having
regulatory
responsibility under the plan.

3.
After appropriate notice and opportunity for comment, the Commission
may,
by written notice, declare such a plan, or any part thereof, effective
if it finds the plan, or any part thereof, necessary or appropriate in
the public interest and for the protection of investors, to foster
cooperation
and coordination among SROs.

4.
Upon the effectiveness of such a plan, or part thereof, any SRO which
is
a party to the plan shall be relieved of responsibility as to any
person
for whom such responsibility is allocated under the plan to another SRO
to the extent of such allocation.

5.
After the Commission has declared a plan or part thereof effective
pursuant
to paragraph 3 of this rule, or acted pursuant to paragraph 6 of this
rule,
an SRO relieved of responsibility may notify customers of, and persons
doing business with, such member or participant of the limited nature
of
its responsibility for such member’s or participant’s acts, practices
and
course of business.

6.
In the event that a plan declared effective pursuant to paragraph 3
does
not provide for all members or participants or does not allocate
regulatory
responsibilities, the Commission may, after notice and opportunity for
hearing, designate one or more SROs responsible for specified
regulatory
responsibilities with respect to such members or participants.

1.
Subject to paragraphs 2 through 6 of this rule, the Commission may,
where
it is satisfied that it is in the interest of the investing public, or
appropriate to do so for the protection of investors, after due notice
and a hearing:chanroblesvirtuallawlibrary

a.
suspend registration of an Exchange, clearing agency and/or self
regulatory
organization (hereinafter collectively “Exchange”) upon findings that
such
Exchange has willfully violated or is unable to comply with any
provision
of this Code, or the rules and regulations hereunder, or its own rules,
or has failed to enforce compliance therewith by a member of, person
associated
therewith, or a participant in such Exchange; or

b.
suspend any or all officers of said Exchange and appoint an independent
administrator knowledgeable in capital market operations to take over
the
management of the Exchange, and/or suspend any and all member/s of the
board of directors and appoint new director/s to serve during the
suspension
period, upon findings that such officer/s and/or director/s have
willfully
violated any provision of this Code,
any other law administered by the Commission, the rules or regulations
thereunder, or the rules of such Exchange, or abused his authority, or
without reasonable justification or excuse has failed to enforce
compliance
with any of such provisions.

2.
Upon discovery of any of the above-mentioned violation or failures, the
Commission shall notify the Exchange, officer/s and/or director/s
thereof
and set a period of time in which such violation or failure shall be
rectified,
which period shall be no less than ten (10) days nor more than ninety
(90)
days.

3.
In the event that an Exchange fails to rectify such violation or
failure
within the stated period, which the Commission may extend only once
based
on its finding that such extension is in the public interest or for the
protection of investors, the Commission, after due notice and a
hearing,
may exercise its powers hereunder.

4.
For as long as an order suspending any officer/s and/or director/s is
in
effect under this rule, none of the functions to which the order
relates
shall be performed, where applicable, by the officer or director to
which
it relates.

5.
Where an independent administrator is appointed under this rule, such
administrator
shall immediately prepare a workplan which shall be submitted to the
Commission
for approval and/or amendment, to address the underlying reason for the
suspension. Such workplan shall include a timetable for compliance with
this Code which shall not be later than the period of suspension.

6.
At the end of suspension period, or upon expiration of the period set
forth
in the workplan approved by the Commission, the Commission may (a) lift
the suspension order and reinstate the Exchange’s registration, (b)
revoke
such registration pursuant to this Code; (c) reinstate the Exchange’s
officer/s
and/or board member/s, and/or (d) issue an order prohibiting officers
and/or
members of the board who have been suspended from serving in such
capacity
for a stated period.

7.
Immediately after the issuance of a decision to revoke registration, no
new transactions shall be effected, except as necessary to protect
investors.

SRC
Rule 42-1
Registration
of Clearing Agencies

1.
An application for registration as a clearing agency or any amendment
thereto
shall be filed with the Commission on SEC Form 42-CA in accordance
with
the instructions contained therein along with the prescribed
registration
fee; provided, however, that an applicant for registration as
clearing
agency may also, at the same time, apply for registration as an SRO
pursuant
to SRC Rule 39.1-3 on SEC Form 42-SRO.

2.
In addition to the prescribed registration fee prescribed above and for
the privilege of doing business for the preceding calendar year or any
part thereof, every Clearing Agency shall pay to the Commission, on or
before the 30th day of the fourth month after the end of the fiscal
year,
a prescribed annual fee.

3.
After reviewing an application for registration as a clearing
agency,
or an amendment thereto, the Commission shall:chanroblesvirtuallawlibrary

a.
grant registration or approve the amendment;

b.
require a change in the Articles of Incorporation, By-laws, contracts,
rules or procedures (hereinafter “rules”) to ensure their fair
administration
or to make them conform to the requirements of the Code and rules and
regulations
adopted thereunder;

c.
deny registration or the amendment if:chanroblesvirtuallawlibrary

(i)
the clearing agency does not have the capacity and resources to enforce
compliance with its rules as proposed or amended;

(ii)
the rules or any amendment thereto would be inconsistent with
provisions
of the Code, or rules and regulations adopted thereunder or with the
development
and operation of a prompt and accurate clearance and settlement system
and the safeguarding of money and securities in its custody, within its
control or for which it is responsible; or
(iii)
the application for registration or an amendment thereto is incomplete,
inaccurate or misleading; or

d.
exempt from registration due to the limited volume of
transactions
and based on findings that it is not practicable and necessary or
appropriate
in the public interest or for the protection of investors to require
such
registration.

4.
If any of the information reported on SEC Form 42-CA becomes
inaccurate,
misleading or incomplete or requires updating for any reason, including
changes to rules and the list of directors and officers, the registrant
shall correct the information by filing an amendment within seven (7)
days
after the date on which the information contained in the application
became
inaccurate, misleading or incomplete. Amendments to SEC Form 42-CA
which
update the registrant’s list of directors, officers, partners or
shareholders
shall be deemed to satisfy Section 26 of the Corporation Code of the
Philippines.

6.
On an annual basis, a registered clearing agency shall file with the
Commission
its audited balance sheet and statement of income and expenses, and all
notes or schedules thereto within 105 days from the end of its fiscal
year.
Financial statements filed pursuant to this subsection shall be deemed
to satisfy Section 141 of the Corporation Code of the Philippines.

SRC
Rule 42-2
Reports
from Clearing Agencies

If
a registered clearing agency at any time becomes aware of any
development
relating to a participant that leads such clearing agency to believe
that
(1) such participant has breached, is in breach, or is about to breach
the clearing agency’s rules, or (2) the participant has experienced, is
experiencing, or is about to experience material operational or
financial
difficulties, which breach or difficulties may adversely affect such
participant,
such registered clearing agency shall immediately notify the Commission
and provide any documentation or evidence leading the clearing agency
to
such determination.

SRC
Rule 48.1-1
Margin

1.
A Broker Dealer shall not extend credit to a customer in an amount that
exceeds fifty percent (50%) of the current market value of the security
at the time of the transaction. In no event shall new or additional
credit
be extended in an account in which the equity is less than P50,000.00.

2.
The margin maintained in a margin account of a customer shall be no
less
than twenty five percent (25%) of the current market value of all
securities
"long" in the account and thirty percent (30%) of the current market
value
of securities "short" in the account.

3.
When there is an insufficiency of margin, a call for additional margin
shall be issued promptly by the Broker Dealer to the customer. A call
for
initial margin shall be satisfied within five (5) business days from
the
date the insufficiency is created. A call for maintenance margin shall
be satisfied within 24 hours after the call is issued.

4.
If a margin call is not met within the time prescribed in paragraph (3)
above, the Broker Dealer shall liquidate securities sufficient to meet
the margin call or eliminate the margin deficiency existing on the day
such liquidation is required, whichever is less. The Broker Dealer
shall
liquidate the securities through the Exchange on which it is traded or
in the best available public market. If the margin deficiency in the
account
in less than P10,000, no action need be taken by the Broker Dealer.

5.
The required payment date for a call for initial margin may be extended
by seven (7) days upon written application delivered by hand or
facsimile
transmission by the Broker Dealer to an Exchange, in the case of
members
of that Exchange, or to the Commission, in the case of non exchange
members.
In granting such an extension, the Exchange or Commission will take
into
consideration whether the Broker Dealer and the customer are acting in
good faith and whether exceptional circumstances warrant such
extension.
Application for the extension must be received and acted upon before
the
expiration of the original payment period or the expiration of any
previous
extension.

SRC
Rule 49.1-1
Net
Capital Rule

1.
(a) Every Broker Dealer at all times shall have and maintain net
capital
no less than the greater of P5 Million Pesos or five percent (5%) of
his
aggregate indebtedness.

(b)
Every Broker Dealer shall make a computation of net capital on a daily
basis. Such computations, upon request by an Exchange if such Broker
Dealer
is a member, and/or the Commission shall immediately be provided in
written
form.

(c)
Every Broker Dealer shall immediately cease doing business as a Broker
Dealer, and notify an Exchange if it is a member of that Exchange, and
the Commission if it determines that its net capital falls below the
minimum
amounts required pursuant to this Rule.

(d)
The Commission or an Exchange, in the case of a member of an Exchange,
may require Broker Dealers from time to time to submit reports which
reflect
their financial and operational condition, including net capital.

2.
No Broker Dealer shall permit its aggregate indebtedness to all other
persons
to exceed 2,000 percent of its net capital.

3.
The term aggregate indebtedness shall mean the total money liabilities
of a Broker Dealer arising in connection with any transaction
whatsoever,
and includes, among other things, money borrowed, money payable against
securities loaned and securities failed to receive, the market value of
securities borrowed to the extent to which no equivalent value is paid
or credited (other than the market value of margin securities borrowed
from customers and margin securities borrowed from non-customers),
customers'
and non-customers' free credit balances, and credit balances in
customers'
and non-customers' accounts having short positions in securities, but
excluding:chanroblesvirtuallawlibrary

(a)
Indebtedness adequately collateralized by securities which are carried
long by the Broker Dealer and which have not been sold or by securities
which collateralize a secured demand note in conformity with SRC Rule
49.1-2;

(b)
Amounts payable against securities loaned, which securities are carried
long by the Broker Dealer and which have not been sold or which
securities
collateralize a secured demand note in conformity with SRC Rule 49.1-2;

(c)
Amounts payable against securities failed to receive which securities
are
carried long by the Broker Dealer and which have not been sold or which
securities collateralize a secured demand note in conformity with SRC
Rule
49.1-2; or amounts payable against securities failed to receive
for
which the Broker Dealer also has a receivable related to securities of
the same issue and quantity thereof which are either fails to deliver
or
securities borrowed by the Broker Dealer;

(d)
Fixed liabilities adequately secured by assets acquired for use in the
ordinary course of the trade or business of a Broker Dealer but not
other
fixed liabilities Secured by assets of the Broker Dealer shall be so
excluded
unless the sole recourse of the creditor for nonpayment of such
liability
is to such asset;

(e)
Indebtedness subordinated to the claims of creditors pursuant to a
satisfactory
subordination agreement in conformity with SRC Rule 49.1-2;

(f)
Liabilities which are effectively subordinated to the claims of
creditors
(but which are not subject to a satisfactory subordination agreement in
conformity with SRC Rule 49.1-2; by non-customers of the Broker
Dealer
prior to such subordination, except such subordinations by customers as
have been approved by an Exchange in the case of a member of that
Exchange
and the Commission in the case of a firm that is not a member of an
Exchange;

(g)
Credit balances in accounts of general partners;

(h)
Deferred tax liabilities; and

(i)
Eighty percent (80%) of amounts payable against securities loaned for
which
the Broker Dealer has receivables related to securities of the same
class
and issue and quantity that are securities borrowed by the Broker
Dealer.

4.
The term net capital shall be deemed to mean the net worth
of a Broker Dealer, adjusted by the following, provided, however, that
in determining net worth, all long and all short securities positions
shall
be marked to their market value:chanroblesvirtuallawlibrary

(b)
Excluding liabilities of the Broker Dealer which are subordinated to
the
claims of creditors pursuant to a satisfactory subordination agreement
in conformity with SRC Rule 49.1-2;

(c)
Deducting, in the case of a Broker Dealer who is a sole proprietor, the
excess of liabilities which have not been incurred in the course of
business
as a Broker Dealer over assets not used in the business;

(d)
Deducting Deposit for Futures Stock Subscription for which no
application
for increase in capital stock or request for exemption for registration
has been filed with the Commission. For net capital purposes, the same
shall be considered part of aggregate indebtedness unless there is
evidence
that such amount is a deposit but an irrevocable subscription or a
subordinated
loan agreement has been entered into with the subscriber;

(e)
Deducting fixed assets and assets which can not be readily converted
into
cash (less any indebtedness excluded in accordance with paragraph 3 (d)
of this Rule) including, among other things:chanroblesvirtuallawlibrary

(ii)
All unsecured advances and loans; deficits in customers' and
non-customers'
unsecured and partly secured notes; deficits in special omnibus
accounts
or similar accounts carried on behalf of another Broker Dealer, after
application
of calls for margin, marks to the market or other required deposits
that
are outstanding four (4) business days or less; deficits in customers’
and non-customers’ unsecured and partly secured accounts after
application
of calls for margin, marks to the market or other required deposits
that
are outstanding four (4) business days or less, except deficits in cash
accounts for which not more than one extension respecting a specified
securities
transaction has been requested and granted; the market value of stock
loaned
in excess of the value of any collateral received therefor; and any
collateral
deficiencies in secured demand notes in conformity with SRC Rule 49.1-2;

For
the purpose of the above, a loan or any other form of receivables shall
be considered “unsecured” unless the following conditions exist:chanroblesvirtuallawlibrary

(A)
the receivable is secured by collateral which is otherwise unencumbered
provided,
however, that such receivable will be considered secured only to
the
extent of the market value of such collateral after application of such
percentage deductions as may be prescribed by the Commission;

(B)
the collateral is in the possession or control of the Trading Member;
and

(C)
the Trading Member has a legally enforceable written security agreement
executed by the debtor in its favor under which the Trading Member
shall
have the power to readily sell or otherwise convert the collateral into
cash.

(iii)
Interest receivable, floor brokerage receivable, commissions receivable
from other Broker Dealers, and management fees receivable from
registered
investment companies, all of which receivables are outstanding longer
than
thirty (30) days from the date they arose; dividends receivable
outstanding
longer than thirty (30) days from the payable date;

(iv)
Insurance claims which, after fifteen (15) business days from the date
the loss giving rise to the claim is discovered, are not covered by an
opinion of outside counsel that the claim is valid and is covered by
insurance
policies presently in effect; insurance claims which after thirty (30)
business days from the date the loss giving rise to the claim is
discovered
and which are accompanied by an opinion of outside counsel described
above,
have not been acknowledged in writing by the insurance carrier as due
and
payable; and insurance claims acknowledged in writing by the carrier as
due and payable outstanding longer than twenty (20) business days from
the date they are so acknowledged by the carrier;

(v)
All other unsecured receivables; all assets doubtful of collection less
any reserves established therefor; the amount by which the market value
of securities failed to receive outstanding longer than thirty (30)
days
exceeds the contract value of such fails to receive;

(vi)
One percent (1%) of the market value of securities borrowed
collateralized
by an irrevocable letter of credit; and

(vii)
Any receivable from an affiliate of the Broker Dealer (not otherwise
deducted
from net worth) and the market value of any collateral given to an
affiliate
(not otherwise deducted from net worth) to secure a liability over the
amount of the liability of the Broker Dealer unless the books and
records
of the affiliate are made available for examination when requested by
the
Commission or an Exchange, where a Broker Dealer is a member of that
Exchange,
for the Broker Dealer in order to demonstrate the validity of the
receivable
or payable. The provisions of this subsection shall not apply where the
affiliate is a Broker Dealer;

(f)
(i) Deducting the market value of all short securities differences
(which
shall include securities positions reflected on the securities record
which
are not susceptible to either count or confirmation) unresolved after
discovery
in accordance with the following schedule:chanroblesvirtuallawlibrary

Percentage
of
Market
Number of

Value
of
Short
Business Days

Securities
Differences
After Discovery

25%
7

50%
14

75%
21

100%
28

(ii)
Deducting the market value of any long securities differences, where
such
securities have been sold by the Broker Dealer before they are
adequately
resolved, less any reserves established therefor;

(iii)
For an Exchange member, that Exchange, and in the case of a Broker
Dealer
that is not a member of an Exchange, the Commission may extend the
periods
in paragraph (i) above for up to ten (10) business days if it finds
that
exceptional circumstances warrant an extension.

(g)
(i) Deducting for all securities or evidences of indebtedness (other
than
those described in subparagraphs (ii) and (iii) below) in the
proprietary
or other accounts of the Broker Dealer, fifteen percent (15%) of the
market
value of the greater of the long or short positions and to the extent
the
market value of the lesser of the long or short positions exceeds
twenty
five (25%) of the market value of the greater of the long or short
positions,
the percentage deduction on such excess shall be fifteen percent (15%)
percent of the market value of such excess. No deduction need be made
in
the case of:chanroblesvirtuallawlibrary

A.
Securities that are convertible into or exchangeable for other
securities
within a period of ninety (90) days, subject to no conditions other
than
the payment of money, and the other securities into which such security
is convertible or for which it is exchangeable, are short in the
accounts
of such Broker Dealer; or

B.
A security that has been called for redemption and that is redeemable
within
ninety (90) days.

(ii)
Deducting, in the case of securities in the proprietary or other
accounts
of the Broker Dealer, which are not listed or traded on an Exchange,
the
following amounts:chanroblesvirtuallawlibrary

A.
In the case where there are regular quotations for the securities by
three
(3) or more independent dealers (exclusive of the computing Broker
Dealer)
and where each such quotation represents a bona fide offer to Brokers
or
dealers to both buy and sell in reasonable quantities at stated prices,
the deduction shall be determined in accordance with subparagraph (i)
above;

B.
In the case where there are regular quotations for the securities by
only
one or two independent dealers (exclusive of the computing Broker
Dealer)
and where each such quotation represents a bona fide offer to Brokers
Dealers
both to buy and sell in reasonable quantities, at stated prices, the
deduction
on both the long and short position shall be forty percent (40%); and

C.
W here a Broker Dealer demonstrates that there is sufficient liquidity
for any securities long or short in the proprietary or other accounts
of
the Broker Dealer which are subject to a deduction required by
subparagraph
ii (b) above, such deduction, upon a proper showing to an Exchange in
the
case of a member of that Exchange and to the Commission in the case of
a firm that is not a member of an Exchange may be appropriately
decreased,
but in no case shall such deduction be less than that prescribed in
subparagraph
(i) above.

(iii)
Deducting for securities issued by the Republic of the Philippines or
investment
grade non convertible corporate debt securities having a fixed interest
rate and fixed maturity date in the proprietary or other accounts of
the
Broker Dealer, the applicable percentage of the market value of the
greater
of the long or short positions in each of the categories specified
below:chanroblesvirtuallawlibrary

less
than 1 year to maturity - 2%

1
year but less than 2 years to maturity – 3%

2
years but less than 3 years to maturity – 5%

3
years but less than 5 years to maturity – 6%

5
years but less than ten years to maturity – 7%

(iv)
Deducting in the case of unit trusts and other investment in the
proprietary
or other accounts of the Broker Dealer forty percent (40%) of the
market
value of such investments.

(v)
In the case of securities of a single class or series of an issuer
(other
than securities issued by the Republic of the Philippines) which are
long
or short in the proprietary or other accounts of a Broker Dealer,
including
securities that are collateral to secured demand notes in conformity
with
SRC Rule 49.1-2 and that have a market value of more than ten percent
(10%)
of the net capital of a Broker Dealer before the application of
haircuts
required by this rule, there shall be an additional deduction from net
worth and/or the collateral value for securities collateralizing a
secured
demand note in conformity with SRC Rule 49.1-2 equal to fifty percent
(50%)
of the percentage deduction otherwise provided by haircut provisions of
this rule on that portion of the securities position in excess of ten
percent
(10%) of the net capital of the Broker Dealer before the application of
the haircuts.

(h)
Deduction of one hundred percent (100%) of the carrying value in the
case
of securities or evidence of indebtedness, in the proprietary or other
account of the Broker Dealer, for which there is no ready market, as
defined
in paragraph 7 of this Rule, and securities, in the proprietary or
other
accounts of the Broker Dealer, which cannot be publicly offered or sold
because of statutory, regulatory or contractual arrangements or other
restrictions;

5.
Adequately secured indebtedness shall be deemed to exist when the
excess
of the market value of the collateral over the amount of the
indebtedness
is sufficient to make the loan acceptable as a fully secured loan to
banks
regularly making secured loans to Broker Dealers.

6.
Customer shall mean any person from whom, or on whose behalf, a
Broker
Dealer received, acquired or holds funds or securities for the account
of such person, but shall not include a general, special or limited
partner
or director or officer of the Broker Dealer, or any person to the
extent
that such person has a claim for property or funds which by contract,
agreement
or understanding, or by operation of law, is part of the capital of the
Broker Dealer or is subordinated to the claims of creditors of the
Broker
Dealer. However, the term “customer” of a Broker Dealer shall include
another
Broker Dealer (the initiating Broker as defined in Section 34.1-2
hereof)
wherein the latter maintains separately a Dealer account and a special
omnibus account in behalf of his customer with the former.

7.
(a) Ready Market shall include a recognized established
securities
market in which exists independent bona fide offers to buy and sell so
that a price reasonably related to the last sales price or current bona
fide competitive bid and offer quotations can be determined for a
particular
security almost instantaneously and where payment will be received in
settlement
of a sale at such price within a relatively short time.

(b)
Ready market shall also be deemed to exist where securities have been
accepted
as collateral for a loan by a bank and where the Broker Dealer
demonstrates
to an Exchange in the case of a member of that Exchange or the
Commission
in the case of a firm that is not a member of an Exchange that such
securities
adequately secure such loans.

LIMITATIONS
ON WITHDRAWAL OF EQUITY CAPITAL

8.
(a) No equity capital of a Broker Dealer may be withdrawn by action of
a stockholder or a partner or by redemption or repurchase of shares of
stock or through the payment of dividends or any similar distribution,
nor may any unsecured advance or loan be made to a stockholder,
partner,
sole proprietor, employee or affiliate, if after giving effect thereto
and to any other such withdrawals, advances or loans and any payments
under
satisfactory subordination agreements in conformity with SRC Rule
49.1-2
which are scheduled to occur within one hundred and eighty (180) days
following
such withdrawal, advance or loan if:chanroblesvirtuallawlibrary

(i)
The Broker Dealer’s net capital would be less than 120 percent of the
minimum
amount required by paragraph 1of this Rule; or

(ii)
The aggregate indebtedness of the Broker Dealer exceeds 1500 percent of
its net capital.

(b)
For purposes of paragraph (a) above, the term equity
capital
includes capital contributions by partners, par or stated value of
capital
stock, paid-in capital in excess of par, retained earnings or other
capital
accounts.

(c)
Paragraph (a) above shall not preclude a Broker Dealer from making
required
tax payments or preclude the payment to partners of reasonable
compensation,
and such payments shall not be included in the calculation of
withdrawals,
advances, or loans for purposes of paragraph (a) above.

(d)
For the purpose of paragraph (a) above, any transaction between a
Broker
Dealer and a stockholder, partner, sole proprietor, employee or
affiliate
that results in a diminution of the Broker Dealer’s net capital shall
be
deemed to be an advance or loan of net capital.

9.
Every Broker Dealer shall notify the Commission within twenty four (24)
hours after the occurrence of any of the following events:chanroblesvirtuallawlibrary

(a)
The Broker Dealer’s computation shows that its Aggregate Indebtedness
is
in excess of 1,700 percent of its adjusted net capital; and/or

(b)
The Broker Dealer’s computation shows that its total adjusted net
capital
is less than one hundred twenty percent (120%) of the required minimum
net capital.

SRC
Rule 49.1-2
Satisfactory
Subordination Agreements

1.
a. This Rule sets forth minimum and non-exclusive requirements for
satisfactory
subordination agreements (hereinafter “subordination agreement”). An
Exchange,
in the case of a member of that Exchange or the Commission may require
or the Broker Dealer may include such other provisions as deemed
necessary
or appropriate to the extent such provisions do not cause the
subordination
agreement to fail to meet the minimum requirements of this Rule.

b.
For purposes of SRC Rule 49.1-1 and this Rule:chanroblesvirtuallawlibrary

i.
A subordination agreement may be either a subordinated loan
agreement or a secured demand note agreement.

iii.
Collateral Value of any securities pledged to secure a secured demand
note
shall mean the market value of such securities after reducing the
market
value of the securities by 30 percent, except for securities issued by
the Republic of the Philippines. In lieu of the 30 percent deduction,
the
Broker Dealer shall reduce the market value of securities issued by the
Republic of the Philippines pledged to secure the secured demand note
by
the percentage deductions set forth in paragraph (4)(g)(iii) of SRC
Rule
49.1-1.

iv.
Payment Obligation shall mean the obligation of a Broker Dealer in
respect
of any subordination agreement (i) to repay cash loaned to the Broker
Dealer
pursuant to a subordinated loan agreement or (ii) to return a secured
demand
note contributed to the Broker Dealer or reduce the unpaid principal
amount
thereof and to return cash or securities pledged as collateral to
secure
the secured demand note. Payment shall mean the performance by a Broker
Dealer of a Payment Obligation.

v.
(A) Secured demand note agreement shall mean an agreement (including
the
related secured demand note) evidencing or governing the contribution
of
a secured demand note to a Broker Dealer and the pledge of securities
and/or
cash with the Broker Dealer as collateral to secure payment of such
secured
demand note. The secured demand note agreement may provide that neither
the lender, his heirs, executors, administrators or assigns shall be
personally
liable on such note and that in the event of default the Broker Dealer
shall look for payment of such note solely to the collateral then
pledged
to secure the same.

(B)
The secured demand note shall be a promissory note executed by the
lender
and shall be payable on the demand of the Broker Dealer to which it is
contributed; provided, however, that the making of such demand may be
conditioned
upon the occurrence of any of certain events which are acceptable to
the
Commission and to an Exchange in the case of a Broker Dealer which is a
member of that Exchange.

(C)
If such note is not paid upon presentment and demand as provided for
therein,
the Broker Dealer shall have the right to liquidate all or any part of
the securities then pledged as collateral to secure payment of the same
and to apply the net proceeds of such liquidation, together with any
cash
then included in the collateral, in payment of such note. Subject to
the
prior rights of the Broker Dealer as pledgee, the lender, as defined
herein,
may retain ownership of the collateral and have the benefit of any
increases
and bear the risks of any decreases in the value of the collateral and
may retain the right to vote securities contained within the collateral
and any right to income therefrom or distributions thereon, except the
Broker Dealer shall have the right to receive and hold as pledgee all
dividends
payable in securities and all partial and complete liquidating
dividends.

(D)
Subject to the prior rights of the Broker Dealer as pledgee, the lender
may have the right to direct the sale of any securities included in the
collateral, to direct the purchase of securities with any cash included
therein, to withdraw excess collateral or to substitute cash so other
securities
as collateral, provided that the net proceeds of any such sale and the
cash so substituted and the securities so purchased or substituted are
held by the Broker Dealer, as pledgee, and are included within the
collateral
to secure payment of the secured demand note, and provided further that
no such transaction shall be permitted if, after: giving effect
thereto,
the sum of the amount of any cash, plus the Collateral Value of the
securities,
then pledged as collateral to secure the secured demand note would be
less
than the unpaid principal amount of the secured demand note.

(E)
Upon payment by the lender, as distinguished from a reduction by the
lender
which is provided for in “Annex E” paragraph (6)(c) or
reduction
by the Broker Dealer as provided for in “Annex E” paragraph (7) of this
rule, of all or any part of the unpaid principal amount of the secured
demand note, a Broker Dealer shall issue to the lender a subordinated
loan
agreement in the amount of such payment (or in the case of a Broker
Dealer
that is a partnership credit a capital account of the lender) or issue
preferred or common stock of the Broker Dealer in the amount of such
payment,
or any combination of the foregoing, as provided for in the secured
demand
note agreement.

vi.
Lender shall mean the person who lends cash to a Broker Dealer
pursuant
to a subordinated loan agreement and the person who contributes a
secured
demand note to a Broker Dealer pursuant to a secured demand note
agreement.

2.
The Minimum requirements for Subordination Agreements and Miscellaneous
Provisions are set forth in “Annex E”.

(a)
A Broker Dealer on a daily basis shall obtain and shall thereafter
maintain
the physical possession or control of all fully paid securities and
excess
margin securities carried by a Broker Dealer for the account of
customers

(b)
A Broker Dealer shall not be deemed to be in violation of the
provisions
of paragraph 1(a) regarding physical possession or control of
customers'
securities if, solely as the result of normal business operations,
temporary
lags occur between the time when a security is required to be in the
possession
or control of the Broker Dealer and the time that it is placed in the
firm's
physical possession or under the firm's control; provided, the
Broker
Dealer takes timely steps in good faith to establish prompt physical
possession
or control. The burden of proof shall be on the Broker Dealer to
establish
that the failure to obtain physical possession or control of securities
carried for the account of customers is merely temporary and solely the
result of normal business operations including same day receipt and
redelivery
(turnaround), and to establish that the Broker Dealer has taken timely
steps in good faith to place them in the Broker Dealer’s physical
possession
or control.

(c)
A Broker Dealer shall not be deemed to be in violation of the
provisions
of paragraph 1(a) of this rule regarding physical possession or control
of fully-paid or excess margin securities borrowed from any person, provided,
that the Broker Dealer and the lender, at or before the time of the
loan,
enter into a written agreement that, at a minimum:chanroblesvirtuallawlibrary

(i)
Sets forth in a separate schedule or schedules the basis of
compensation
for any loan and generally the rights and liabilities of the parties as
to the borrowed securities;

(ii)
Provides that the lender will be given a schedule of the securities
actually
borrowed at the time of the borrowing of the securities; and

(A)
provide to the lender, upon the execution of the agreement or by the
close
of the business day of the loan if the loan occurs subsequent to the
execution
of the agreement, collateral consisting exclusively of cash or Republic
of the Philippines Treasury bills and Treasury notes or an irrevocable
letter of credit issued by a bank which fully secures the loan of
securities;
and

(B)
must mark the loan to the market not less than daily and, in the event
the market value of all the outstanding securities loaned at the close
of trading at the end of the business day exceeds 100 percent of the
collateral
then held by the lender, the borrowing Broker Dealer must provide
additional
collateral of the type described in subparagraph (A) above to the
lender
by the close of the next business day as necessary to equal, together
with
the collateral then held by the lender, not less than one hundred
percent
(100%) of the market value of the securities loaned.

2.
Control of Securities. - Securities under the control of a Broker
Dealer
shall be deemed to be securities which:chanroblesvirtuallawlibrary

(a)
Are represented by one or more certificates in the custody or control
of
a clearing agency registered with the Commission in accordance with
Section
42 of the Code the delivery of which certificates to the Broker Dealer
does not require the payment of money or value, and if the books or
records
of the Broker Dealer identify the customers entitled to receive
specified
number or units of the securities so held for such customers
collectively;

(b)
Are carried for the account of any customer by a Broker Dealer and are
carried in a special omnibus account in the name of such Broker Dealer
with another Broker Dealer, such securities being deemed to be under
the
control of such Broker Dealer to the extent that it has instructed such
carrying Broker Dealer to maintain physical possession or control of
them
free of any charge, lien or claim of any kind in favor of such carrying
Broker Dealer or any person claiming through such carrying Broker
Dealer
;

(c)
Are the subject of bona fide items of transfer; provided that
securities
shall be deemed not to be the subject of bona fide items of transfer
if,
within forty (40) days after they have been transmitted for transfer by
the Broker Dealer to the issuer or its transfer agent, new certificates
conforming to the instructions of the Broker Dealer have not been
received
by him, he has not received a written statement by the issuer or its
transfer
agent acknowledging the transfer instructions and the possession of the
securities or he has not obtained a revalidation of a window ticket
from
a transfer agent with respect to the certificate delivered for transfer;

(d)
Are in the custody of a foreign depository, foreign clearing agency or
foreign custodian bank which the Commission upon application from a
Broker
Dealer, an Exchange or upon its own motion, shall designate as a
satisfactory
control location for securities;

(e)
Are in the custody or control of a bank the delivery of which
securities
to the Broker Dealer does not require the payment of money or value and
the bank having acknowledged in writing that the securities in its
custody
or control are not subject to any right, charge, security interest,
lien
or claim of any kind in favor of a bank or any person claiming through
the bank;

(f)
(i) Are held in or are in transit between offices of the Broker
Dealer;
or

(ii)
Are held by a corporate subsidiary if the Broker Dealer owns and
exercises
a majority of the voting rights of all of the voting securities of such
subsidiary, assumes or guarantees all of the subsidiary's obligations
and
liabilities, operates the subsidiary as a branch office of the Broker
Dealer,
and assumes full responsibility for compliance by the subsidiary and
all
of its salesmen and other personnel with the provisions of the Code and
rules and regulations adopted thereunder as well as for all of the
other
acts of the subsidiary and such persons;

(g)
Are in transit to or from Broker Dealers, banks, custodians, registered
transfer agents and registered clearing agencies which are otherwise
good
control locations pursuant to the term of this Rule, Provided,
such
items shall have been in transit from or to the Broker Dealer for a
period
of not more than five (5) business days from the day they are first put
in transit, and provided further, the books and records of the
Broker
Dealer clearly account for such items. An "in transit" account may be
used
for this purpose; or

(h)
Are held in such other locations as the Commission shall upon
application
from a Broker Dealer or an Exchange to which a Broker Dealer is a
member
find and designate to be adequate for the protection of customer
securities.

3.
Requirement to Reduce Securities to Possession or Control.

(a)
Not later than the next business day, a Broker Dealer, as of the close
of the preceding business day, shall determine from the Broker Dealer’s
books or records the quantity of fully paid securities and excess
margin
securities in its possession or control and the quantity of fully paid
securities and excess margin securities not in its possession or
control.
In making this daily determination inactive margin accounts (accounts
having
no activity by reason of purchase or sale of securities, receipt or
delivery
of cash or securities or similar type events) may be computed not less
than once weekly. If such books or records indicate, as of the close of
the business day, that the Broker Dealer has not obtained physical
possession
or control of all fully paid and excess margin securities as required
by
this paragraph and there are securities of the same issue and class in
any of the following non-control locations:chanroblesvirtuallawlibrary

(i)
Securities subject to a lien securing monies borrowed by the Broker
Dealer
or securities loaned to another Broker Dealer, then the Broker Dealer
shall,
not later than the business day following the day on which such
determination
is made, issue instructions for the release of such securities from the
lien or return such loaned securities and obtain physical possession or
control of such securities within two (2) business days following the
date
of issuance of the instructions in the case of securities subject to
lien
securing borrowed monies and within five (5) business days following
the
date of issuance of instructions in the case of securities loaned;

(ii)
Securities included on his books or records as failed to receive more
than
thirty (30) days, then the Broker Dealer shall, not later than the
business
day following the day on which such determination is made, take prompt
steps to obtain physical possession or control of securities so failed
to receive through a buy-in procedure or otherwise; or

(iii)
Securities receivable by the Broker Dealer as a stock dividend
receivable,
stock split, or similar distribution for more than forty five (45)
days,
then the Broker Dealer shall, not later than the business day following
the day on which such determination is made, take prompt steps to
obtain
physical possession or control of securities so receivable through a
buy-in
procedure or otherwise.

(b)
A Broker Dealer which is subject to the requirements of this rule with
respect to physical possession or control of fully paid and excess
margin
securities shall prepare and maintain a current and detailed written
description
of the procedures which it utilizes to comply with the possession or
control
requirements set forth in this Rule.

(c)
A Broker Dealer which is subject to this rule shall record information
relating to physical possession and control of fully paid and excess
margin
securities on a quarterly basis and submit such record to an Exchange,
in the case of a member of that Exchange or to the Commission, in the
case
of a non-member, in accordance with the format set forth in “Annex
F”.

4.
Special Reserve Bank Account for the Exclusive Benefit of Customers.

(a)
Every Broker Dealer shall maintain with a bank/s at all times when
deposits
are required or hereinafter specified a "Special Reserve Bank Account
for
the Exclusive Benefit of Customers" (hereinafter referred to as the
"Reserve
Bank Account"), and it shall be separate from any other bank account of
the Broker Dealer. Such Broker Dealer shall at all times maintain in
the
Reserve Bank Account, through deposits made therein, cash and/or
qualified
securities in amounts computed in accordance with the formula attached
hereto as “Annex G”.

(b)
It shall be unlawful for any Broker Dealer to accept or use any of the
amounts under items comprising Total Credits under the formula referred
to in paragraph 4(a) above except for the specified purposes indicated
under items comprising Total Debits under the formula, and, to the
extent
Total Credits exceed Total Debits, the net amount thereof shall be
maintained
in the Reserve Bank Account required by paragraph 4(a) above.

(c)
(i) Computations necessary to determine the amount required to be
deposited pursuant to paragraph 4(a) above shall be made weekly, as of
the close of the last business day of the week and the deposit so
computed
shall be made no later than 1 hour after the opening of banking
business
on the second following business day; Provided, however, a
Broker
Dealer which has aggregate indebtedness not exceeding 800
percent
of net capital as defined in SRC Rule 49.1-1 and which carries
aggregate
customer funds as defined in paragraph 13(i) of this rule as computed
at
the last required computation pursuant to this rule, not exceeding P 25
million, may in the alternative make the computation monthly, as of the
close of the last business day of the month, and in such event, shall
deposit
not less than 105 percent of the amount so computed no later than 1
hour
after the opening of banking business on the second following business
day.

(ii)
If a Broker Dealer, computing on a monthly basis, has, at the time of
any
required computation, aggregate indebtedness in excess of 800 percent
of
net capital, such Broker Dealer shall thereafter compute weekly as
aforesaid
until four successive weekly computations are made, none of which were
made at a time when his aggregate indebtedness exceeded 800 percent of
his net capital.

(iii)
Computations in addition to the computations required in this paragraph
(c)(i) above, may be made as of the close of any other business day,
and
the deposits so computed shall be made no later than 1 hour after the
opening
of banking business on the second following business day.

(iv)
The Broker Dealer shall make and maintain a record of each such
computation
made pursuant to paragraph (c)(i) above and submit such computation
quarterly
to an Exchange, in the case of a member of that Exchange, or to the
Commission
in the case of a non-member.

5.
Notifications of Banks.

A
Broker Dealer required to maintain the Reserve Bank Account prescribed
by paragraph (4) of this Rule shall obtain and preserve in accordance
with
SRC Rule 52.1-2 a written notification from each bank in which the firm
has its Reserve Bank Account that the bank was informed that all cash
and/or
qualified securities deposited therein are being held by the bank for
the
exclusive benefit of customers of the Broker Dealer in accordance with
the rules and regulations of the Commission, and are being kept
separate
from any other accounts maintained by the Broker Dealer with the bank,
and the Broker Dealer shall have a written contract with the bank which
provides that the cash and/or qualified securities shall at no time be
used directly or indirectly as security for a loan to the Broker Dealer
by the bank and shall be subject to no right, charge, security
interest,
lien or claim of any kind in favor of the bank or any person claiming
through
the bank.

6.
Withdrawals from the Reserve Bank Account.

A
Broker Dealer may make withdrawals from the firm's Reserve Bank Account
if and to the extent that at the time of the withdrawal the amount
remaining
in the Reserve Bank Account is not less than the amount then required
by
paragraph (4) of this rule. A bank may presume that any request for
withdrawal
from a Reserve Bank Account is in conformity and compliance with this
paragraph.
On any business day on which a withdrawal is made, the Broker Dealer
shall
make a record of the computation on the basis of which the firm makes
such
withdrawal, and the Broker Dealer shall preserve such computation in
accordance
with SRC Rule 52.1-2.

7.
Buy-In of Short Security Differences.

A
Broker Dealer shall within forty five (45) days after the date of the
examination,
count, verification and comparison of securities pursuant to SRC Rule
52.1-10,
preparation of the annual report of financial condition in accordance
with
SRC Rule 52.1-5, or for any other purpose, buy-in all short security
differences
which are not resolved during the forty five (45) day period.

8.
Notification in the Event of Failure to Make a Required Deposit.

If
a Broker Dealer shall fail to make in its Reserve Bank Account a
deposit,
as required by this rule, the Broker Dealer shall by fax, telegram or
other
similar means, immediately notify the Commission and an Exchange, if it
is a member of that Exchange, and shall promptly thereafter confirm
such
notification in writing, including the reasons for such failure.

9.
Exemptions.

(a)
The provisions of this Rule shall not be applicable to a Broker Dealer
who carries no margin accounts, promptly transmits all customer funds
and
delivers all securities received in connection with its activities as a
Broker Dealer and does not otherwise hold funds or
securities
for, or owe money or securities to, customers.

(b)
Upon written application by a Broker Dealer, the Commission or an
Exchange,
if the Broker Dealer is a member of that Exchange, may exempt such
Broker
Dealer from the provisions of this rule, either unconditionally or on
specified
terms and conditions, if the Commission or the Exchange finds that the
Broker Dealer has established safeguards for the protection of funds
and
securities of customers comparable with those provided for by this rule
and that it is not necessary in the public interest or for the
protection
of investors to subject the particular Broker Dealer to the provisions
of this rule.

10.
Delivery of Securities.

Nothing
stated in this Rule shall be construed as affecting the absolute right
of a customer of a Broker Dealer to receive in the course of normal
business
operations following demand made on the Broker Dealer, the physical
delivery
of certificates for:chanroblesvirtuallawlibrary

(a)
Fully paid securities to which he is entitled; and

(b)
Margin securities upon full payment by such customer to the Broker
Dealer
of his indebtedness to the Broker Dealer and, subject to the right of
the
Broker Dealer to retain collateral for the firm's own protection beyond
the requirements of SRC Rule 48.1-1, excess margin securities not
reasonably
required to collateralize such customer's indebtedness to the Broker
Dealer.

11.
Completion of Sell Orders on Behalf of Customers.

If
a Broker Dealer executes a sell order of a customer (other than an
order
to execute a sale of securities which the seller does not own) and if
for
any reason whatever the Broker Dealer has not obtained possession of
the
securities from the customer within ten (10) business days after the
settlement
date, the Broker Dealer shall immediately thereafter close the
transaction
with the customer by purchasing securities of like kind and quantity.

12.
Extensions of Time.

If
an appropriate committee of the Exchange is satisfied that a Broker
Dealer
which is a member of that Exchange is acting in good faith in making
the
application and that exceptional circumstances warrant such action,
such
committee, on application of the Broker Dealer, may extend any period
specified
in paragraphs (3)(a)(ii) and (iii), paragraph (7) and paragraph (11) of
this rule, relating to the requirement that such Broker Dealer take
action
within a designated period of time to buy-in in a security, for one or
more limited periods commensurate with the circumstances. Each such
committee
shall make and preserve for a period of not less than three (3) years a
record of each such extension granted which shall contain a summary of
the justification for the granting of the extension.

13.
Definitions.

For
the purpose of this rule:chanroblesvirtuallawlibrary

(a)
Customer shall mean any person from whom or on whose behalf a Broker
Dealer
has received or acquired or holds funds or securities for the account
of
that person. The term shall not include a Broker Dealer nor shall it
include
general partners or directors or principal officers of the Broker
Dealer
or any other person to the extent that the person has a claim for
property
or funds which by contract, agreement or understanding, or by operation
of law, is part of the capital of the Broker Dealer or is subordinated
to the claims of creditors of the Broker Dealer. The term “customer”,
however,
shall include another Broker Dealer (the initiating Broker as
defined
in Section 34.1-2 hereof) wherein the latter maintains separately a
Dealer
account and a special omnibus account in behalf of his customer with
the
former.

(i)
Securities received by or on behalf of a Broker Dealer for the account
of any customer and securities carried long by a Broker Dealer for the
account of any customer; and

(ii)
Securities sold to, or brought for, a customer by a Broker Dealer.

(c)
Fully paid securities shall include all securities carried for
the
account of a customer in a cash account or a margin account if they
have
been fully paid for; provided, however, that the term
fully
paid securities shall not apply to any securities which are
purchased
in transactions for which the customer has not made full payment.

(d)
Margin securities shall mean those securities which have been
purchased
by a customer on the basis of credit extended by a Broker Dealer
pursuant
to the provisions of Section 48 of the Code and SRC Rule 48.1-1.

(e)
Excess margin securities shall mean margin securities having a market
value
in excess of 140 percent of the total of the debit balances in the
customer's
account/s encompassed by paragraph (d) above which the Broker Dealer
identifies
as not constituting margin securities.

(f)
Qualified security shall mean a security issued by the Republic
of
the Philippines or a security in respect of which the principal and
interest
are guaranteed by the Government of the Philippines

(g)
Free credit balances shall mean liabilities of a Broker Dealer to
customers
which are subject to immediate cash payment to customers on demand,
whether
resulting from sales of securities, dividends, interest, deposits, or
otherwise.

(h)
Other credit balances shall mean cash liabilities of a Broker
Dealer
to customers other than free credit balances.

(i)
Funds carried for the account of any customer (also
customer
funds ) shall mean all free credit and other credit balances carried
for
the account of the customer.

(j)
Principal officer shall mean the president, executive vice
president,
treasurer, secretary or any other person performing a similar function
with the Broker Dealer.

(k)
Household members and other persons related to principals includes
husbands
or wives, children, sons-in-law or daughters-in-law and any household
relative
to whose support a principal contributes directly or indirectly. For
purpose
of this paragraph, a principal shall be deemed to be a director,
general
partner or principal officer of the Broker Dealer.

(l)
Affiliated person includes any person who directly or indirectly
controls
a Broker Dealer or any person who is directly or indirectly controlled
by or under common control with the Broker Dealer. Ownership of ten
percent
(10%) or more of the common stock of the relevant entity will be deemed
prima facie control of that entity for purposes of this paragraph.

(m)
Omnibus account shall mean an account in which a Broker Dealer effects
transactions for its customer through another Broker Dealer.

14.
Information relating to Possession and Control Requirements and the
Formula
for Determination of Reserve Requirements of Broker Dealers under SRC
Rule
49.2-1 are set forth as Annexes “F” and “G”
respectively.

SRC
Rule 49.3-1
Lending
and Voting Customers Securities

A
Broker Dealer which extends credit to a customer shall not without the
written consent of the customer, lend the latter’s securities to itself
or to anyone else, or vote them as if they were its own.

SRC
Rule 50-1
Purchases
and Sales in Cash Account

1.
Purchases by a customer in a cash account shall be paid in full within
three (3) business days after the trade date.

2.
If full payment is not received within the required time period, the
Broker
Dealer shall cancel or otherwise liquidate the transaction, or the
unsettled
portion thereof, starting on the next business day but not beyond ten
(10)
business days following the last day for the customer to pay, unless
such
sale cannot be effected within said period for justifiable reasons.

3.
If a transaction is cancelled or otherwise liquidated as a result of
non-payment
by the customer, prior to any subsequent purchase during the next
ninety
(90) days, the customer shall be required to deposit sufficient funds
in
the account to cover each purchase transaction prior to execution.

4.
If the amount of money due from a customer in a cash account is less
than
P10,000, the Broker Dealer may choose not to take the action required
by
paragraph (2).

5.
Exceptions to paragraphs (1), (2), and (3) include when the security
purchased
is unissued or where the purchase is made by the customer with the
understanding
that payment is to be made upon delivery.

6.
Written application for an extension of the period of time required for
payment under paragraph (1) may be made by the Broker Dealer to the
Exchange
in the case of a member of that Exchange or to the Commission, in the
case
of a non-member of the Exchange. Applications for the extension must be
based upon exceptional circumstances and must be filed and acted upon
before
the expiration of the original payment period or the expiration of any
subsequent extension.

7.
If a Broker Dealer executes a sell order of a customer (other than an
order
to execute a sale of securities which the seller does not own) and if
for
any reason whatever the Broker Dealer has not obtained possession of
the
securities from the customer within ten (10) business days after the
settlement
date, the Broker Dealer shall immediately thereafter close the
transaction
with the customer by purchasing securities of like kind and quantity.

8.
If the Broker Dealer is required to take the action required by
paragraph
(7), prior to any subsequent sale during the next ninety (90) days, the
customer will be required to place the securities on deposit in the
account
prior to execution of the transaction.

SRC
Rule 52.1-1
Books
and Records Rule

1.
Every Broker Dealer shall make and keep current the following books and
records relating to its business and they shall be maintained in the
principal
office of the Broker Dealer:chanroblesvirtuallawlibrary

(a)
Blotters (or other records of original entry) containing an itemized
daily
record of all purchases and sales of securities, all receipts and
deliveries
of securities (including certificate numbers), all receipts and
disbursements
of cash and all other debits and credits. Such records shall show the
account
for which each such transaction was effected, the name and amount of
securities,
the unit and aggregate purchase or sale price (if any), the trade date,
settlement date, and the name or other designation of the person from
whom
purchased or received or to whom sold or delivered.

(b)
Ledgers reflecting all assets and liabilities, income and expense and
capital
accounts.

(c)
Ledger accounts (or other records) itemizing separately as to each cash
and margin account of every customer, Broker Dealer and partners
thereof,
all purchases, sales, receipts and deliveries of securities for such
account
and all other debits and credits to such account.

(ii)
Dividends and interest received and paid, including receivable and
payable
balances by security;

(iii)
Securities borrowed and securities loaned-shares and monies;

(iv)
Monies borrowed and monies loaned (together with a record of the
collateral
therefor and any substitutions in such collateral);

(v)
Securities and monies failed to receive and failed to deliver;

(vi)
All long and all short securities record differences arising from the
examination,
count, verification and comparison (by date of examination, count,
verification
and comparison showing for each security the number of long or short
count
differences); and

(vii)
Repurchase and reverse repurchase agreements.

(e)
A securities record or ledger reflecting separately for each security
as
of the clearance dates all "long" or "short" positions
(including
securities in safekeeping and securities that are the subject of
repurchase
or reverse repurchase agreements) carried by such Broker Dealer for his
account of for the account of his customers or partners or others and
showing
the location of all securities long and the offsetting position to all
securities short, including long security count differences and short
security
count differences classified by the date of the physical count and
verification
in which they were discovered, and in all cases the name or designation
of the account in which each position is carried.

(f)
A memorandum of each brokerage order, and of any other instruction,
given
or received for the purchase or sale of securities, whether executed or
unexecuted. Such memorandum shall show the terms and conditions of the
order or instructions and of any modification or cancellation thereof,
the account for which entered, the time of receipt and entry, the price
at which executed and, to the extent feasible, the time of execution or
cancellation. Orders entered pursuant to the exercise of discretionary
power by such Broker Dealer, or any employee thereof, shall be so
designated.
The term "instruction" shall be deemed to include instructions between
associated persons and employees of a Broker Dealer. The term "time of
entry" shall be deemed to mean the time when such Broker Dealer
transmits
the order or instruction for execution so transmitted.

(g)
A memorandum of each purchase and sale for the account of such Broker
Dealer
showing the price and, to the extent feasible, the time of execution;
and
in addition, where such purchase or sale is with a customer other than
a Broker Dealer, a memorandum of each order received, showing the time
of receipt, the terms and conditions of the order, and the account in
which
it was entered: Provided, however, with respect to
purchases
and sales on behalf of a Member Broker Dealer, its officers, directors,
employees, including associated persons, and owner’s thereof, including
discretionary accounts on behalf thereof, the memorandum shall reflect
requirements set forth in SRC Rule 34.1-2.

(h)
Copies of confirmations of all purchases and sales of securities,
including
all repurchase and reverse repurchase agreements, and copies of notices
of all other debits and credits for securities, cash and other items
for
the account of customers and partners of such Broker Dealer.

(i)
A record in respect of each cash or margin account with such Broker
Dealer
indicating (A) the name and address of the beneficial owner of such
account,
and (B) in the case of a margin account, the signature of such owner, provided,
that, in the case of a joint account or an account of a corporation,
such
records are required only in respect of the person or persons
authorized
to transact business for such account.

(j)
A record of all puts, calls, spreads, straddles and other options in
which
such Broker Dealer has any direct or indirect interest or which such
Broker
Dealer has granted, purchased or guaranteed, containing, at least, an
identification
of the security and the number of units involved.

(k)
A record of the proof of money balances of all ledger accounts in the
form
of trial balances, and a record of the computation of aggregate
indebtedness
and net capital, as of the trial balance date. Such trial balances and
computations shall be computed daily, provided in writing upon the
request
of the Commission or any Exchange to which a Broker Dealer is a member,
and prepared at least once a month.

(l)
A questionnaire or application for employment executed by each
associated
person and salesman of such Broker Dealer, which questionnaire or
application
shall be approved in writing by an authorized representative of such
Broker
Dealer and shall contain at least the following information with
respect
to such person:chanroblesvirtuallawlibrary

(i)
His name, address, and the starting date of his employment or other
association
with the Broker Dealer;

(ii)
His date of birth;

(iii)
A complete, consecutive statement of all his business connections for
at
least the preceding ten (10) years, including whether the employment
was
part-time or full-time;

(iv)
A record of any denial of registration, or termination for cause, and
of
any disciplinary action taken, or sanction imposed, upon him by any
agency,
or by any exchange or other SRO including any finding that he was a
cause
of any disciplinary action or had violated any law;

(v)
A record of any denial, suspension, expulsion or revocation of any
registration
of a Broker Dealer with which he was associated in any capacity when
such
action was taken;

(vi)
A record of any permanent or temporary injunction entered against him
or
any Broker Dealer with which he was associated in any capacity at the
time
such injunction was entered;

(vii)
A record of any arrest or indictment for any felony, or any misdemeanor
pertaining to securities, commodities, banking, insurance or real
estate
(including, but not limited to acting as or being associated with a
Broker-Dealer,
investment company, investment house, finance company, bank, or
quasi-bank,
fraud, false statements or omissions, wrongful taking of property or
bribery,
forgery, counterfeiting or extortion, and the disposition of the
foregoing;
and

(viii)
A record of any other name or names by which he has been known or which
he has used: Provided, however, that if such salesman or
associated
person has been registered with the Commission, retention of a full,
correct,
and complete copy of any and all applications for such registration or
approval shall be deemed to satisfy the requirements of this
subparagraph.

2.
Every Broker Dealer shall immediately make available any or all of its
books and records upon request of the Commission, an Exchange or any
other
self regulatory organization of which it is a member of participant
in.
Failure to do so shall result in immediate suspension of the Broker
Dealer’s
registration. Such suspension shall continue until such time as the
books
and records are made available to the requesting organization and the
organization
has satisfied itself that the books and records have not been modified
or otherwise changed or altered during the period of suspension.

3.
The explanation for the Books and Records Rule is set forth in
“Annex H”.

SRC
Rule 52.1-2
Records
Retention Rule

1.
Every Broker Dealer shall preserve for a period of not less than six
(6)
years, the first two years in an easily accessible place, all records
required
to be made pursuant to Paragraphs 1 (a), (b), (c) and (e) of SRC
Rule
52.1-1, the Books and Records Rule.

2.
Every Broker Dealer shall preserve for a period of not less than three
(3) years, the first two years in an accessible place:chanroblesvirtuallawlibrary

(a)
All records required to be made pursuant to paragraphs 1 (d), (f), (g),
(h), (i), (j) and (k) of the Books and Records Rule;

(c)
All bills receivable or payable (or copies thereof), paid or unpaid,
relating
to the business of such Broker Dealer as such;

(d)
Originals of all communications received and copies of all
communications
sent by such Broker Dealer (including inter-office memoranda, e-mails
and
other communications) relating to his business as such;

(e)
All trial balances, computations of aggregate indebtedness and net
capital
(and working papers in connection therewith), financial statements,
branch
office reconciliations and internal audit working papers, relating to
the
business of such Broker Dealer;

(f)
All guaranteed accounts and all powers of attorney and other evidence
of
the granting of any discretionary authority given in respect of any
account,
and copies of resolutions empowering an agent to act on behalf of a
corporation;

(g)
All written agreements (or copies thereof) entered into by such Broker
Dealer relating to his business as such, including client agreements;

(h)
Records which contain the following information in support of amounts
included
in the report prepared as of the audit date in annual audited financial
statements required by SRC Rule 52.1-5:chanroblesvirtuallawlibrary

(i)
Money balance position, long or short, including description, quantity,
price and valuation of each security, including contractual commitments
in customer's accounts, in cash and fully secured accounts, partly
secured
accounts, unsecured accounts and in securities accounts payable to
customers;

(ii)
Money balance and position, long or short, including description,
quantity,
price and valuation of each security, including contractual commitments
in non-customers' accounts, in cash and fully secured accounts, partly
secured and unsecured accounts and in securities accounts payable to
non-customers;

(iii)
Position, long or short, including description, quantity, price and
valuation
of each security, including contractual commitments included in the
Computation
of Net Capital as commitments, securities owned, securities owned not
readily
marketable, and other investments owned not readily marketable;

(iv)
Amount of secured demand note, description of collateral securing such
secured demand note including quantity, price and valuation of each
security
and cash balance securing such secured demand note;

(v)
Number of shares, description of security, exercise price, cost and
market
value of put and call options including short out of the money having
no
market or exercise value, showing listed and unlisted put and call
options
separately;

(vi)
Quantity, price, and valuation of each security underlying the haircut
for undue concentration made in the Computation for Net Capital;

(vii)
Description, quantity, price, and valuation of each security or
contractual
commitment, long or short, in each joint account in which the Broker
Dealer
has an interest, including each participant's interest and margin
deposit;

(viii)
Description, settlement date, contract amount, market price, and
valuation
for each aged failed to deliver requiring a charge in the Computation
of
Net Capital;

(ix)
Detail of all items, not otherwise substantiated which are charged or
credited
in the Computation of Net Capital pursuant to the Net Capital Rule,
such
as cash margin deficiencies, deductions related to securities values
and
undue concentration, aged securities differences and insurance claims
receivable;
and

(x)
Details relating to information for possession or control requirements
and computations for determination of reserve requirements under the
Rule
on Customer Protection-Reserves and Custody of Securities.

(i)
A detailed description of the procedures which the Broker Dealer
utilizes
to comply with requirements set forth in “Annex E”.

3.
Every Broker Dealer shall preserve for a period of not less than six
(6)
years after the closing of any customer's account , the client
agreement,
account statement and any other records which relate to the terms and
conditions
with respect to the opening and maintenance of such account.

4.
Every Broker Dealer shall preserve during the life of the enterprise
and
of any successor enterprise all partnership articles or, in the case of
a corporation, all articles of incorporation or charter, minute books
and
stock certificate books.

5.
Every Broker Dealer shall maintain and preserve in an easily accessible
place all records required under paragraph (1)(l) of the Books and
Records
Rule until at least three (3) years after the associated person or
salesman
has terminated his employment and any other connection with the Broker
Dealer.

6.
The records required to be maintained and preserved pursuant to this
Rule
may be immediately produced or reproduced on microfilm and be
maintained
and preserved for the required time in that form. If such microfilm
substitution
for hard copy is made by a Broker Dealer, it shall (a) at all times
have
available for Commission or any Exchange of which it is a member
examination
of its records, facilities for immediate, easily readable projection of
the microfilm and for producing easily readable facsimile enlargements,
(b) arrange the records and index and file the films in such a manner
as
to permit the immediate location of any particular record, (c) be ready
at all times to provide and immediately provide, any facsimile
enlargement
which the Commission or that Exchange by their examiners or other
representatives
may request, and (d) store separately from the original one other copy
of the microfilm for the time required.

7.
If a person who has been subject to this rule ceases to transact a
business
in securities such person shall, for the remainder of the periods of
time
specified in this rule, continue to preserve the records which he
theretofore
preserved pursuant to this Rule.

8.
If the records required to be maintained and preserved pursuant to the
Books and Records Rule and Records Retention Rule are prepared or
maintained
by an outside service bureau, depository, bank or other recordkeeping
service
on behalf of the Broker Dealer required to maintain and preserve such
records,
such outside entity shall file with the Commission a written
undertaking
in a form acceptable to the Commission, signed by a duly authorized
person,
to the effect that such records are the property of the Broker Dealer
required
to maintain and preserve such records and will be surrendered promptly
on request of the Broker Dealer and including the following provision:chanroblesvirtuallawlibrary

"With
respect to any books and records maintained or preserved on behalf of
[name
of Broker Dealer], the undersigned hereby undertakes to permit
examination
of such books and records at any time or from time to time during
business
hours by representatives or designees of the Securities and Exchange
Commission,
and/or any Exchange to which the Broker Dealer is a member and to
promptly
furnish to the Commission and that Exchange or their designee true,
correct,
complete and current hard copy of any or all or any part of such books
and records."

Agreement
with an outside entity shall not relieve such Broker Dealer from the
responsibility
to prepare and maintain records as specified in this rule or in the
Books
and Records Rule.

9.
Every Broker Dealer subject to this Rule shall furnish promptly to a
representative
of the Commission and any Exchange to which the Broker Dealer is a
member
legible, true and complete copies of those records of the Broker Dealer
which are required to be preserved under this Rule which are requested
by the Commission or that Exchange.

SRC
Rule 52.1-3
Keeping
of Exchange Records

An
Exchange shall keep complete and accurate records of all its
proceedings,
transactions and decisions and such records shall be made available for
inspection by the Commission.

SRC
Rule 52.1-4
Reports
of Exchange Members, and Brokers or Dealers Trading Through Members

Every
member of an Exchange and every Broker Dealer who transacts a business
in securities through the medium of any such member shall, in the
manner
and form to be prescribed by the Commission, make such periodic,
special
or other reports as the Commission may by order require from time to
time.

SRC
Rule 52.1-5
Annual
Audited Financial Reports of Broker Dealers

1.
Every Broker Dealer shall file annually with the Commission and any
Exchange
to which it is a member at the close of its fiscal year an audited
financial
report by an independent certified public accountant and a statement of
management responsibility of said Broker Dealer.

2.
Unless the Broker Dealer notifies the Commission otherwise and receives
written approval to change the date, December 31st of each year shall
be
considered the closing of the fiscal year, and the Annual Audited
Financial
Report is due within 110 days after the close of such fiscal year.

3.
The Annual Audited Financial Report shall contain a Statement of
Financial
Condition in the format outlined in SEC Form 37-AR, a Statement of
Income,
a Statement of Changes in Financial Condition, a Statement of Changes
in
Stockholders’ or Partners’ or Sole Proprietor's Equity, a Statement of
Changes in Liabilities Subordinated to Claims of General Creditors, a
Computation
of Net Capital under SRC Rule 49.1-1, Statement of Management’s
Responsibility;
Information
relating to the Possession or Control Requirements under
“Annex F”
and a Computation for Determination of Reserve Requirements under “Annex
G”; Report describing any material inadequacies found to exist or
found
to have existed since the date of the previous audit;
Results of
Quarterly Securities Count Conducted pursuant to SRC Rule 52.1-10 as of
the date of the balance sheet statement in the Annual Audited Financial
Report.

4.
All supporting papers pertaining to such report or statement shall be
kept
in the possession of the Broker Dealer for at least three (3) years and
shall be made available for examination by the Commission and an
Exchange,
if the Broker Dealer is a member of that Exchange.

5.
For the purposes of this Rule, the term market value shall be
understood
to mean the last sale price of the security on the date of the report
or
statement; if no sale of the corresponding security is made on that
date,
it shall be understood to mean the bid price and, in the absence of any
buyer, it shall be taken to mean the last sale price which is below the
offer price on the date of the report or statement. For purposes of
determining
“market value” for a short position, where no sale of the corresponding
security is made on that date, it shall be understood to mean the offer
price and, in the absence of any seller, it shall be taken to mean the
last sale price which is above the bid price on the date of the report
or statement.

6.
For the purposes of this Rule, the term material inadequacy encompasses
either a material weakness in internal control or a material inadequacy
in the practices and procedures for safeguarding securities.

A
material inadequacy that is expected to be reported includes any
condition
that has either contributed substantially to or, if appropriate
corrective
action is not taken, could reasonably be expected to cause any of the
following:chanroblesvirtuallawlibrary

a.
Inhibit a Broker Dealer from completing securities transactions or
promptly
discharging its responsibilities to customers or to other Broker
Dealers
or creditors;

b.
Result in material financial loss;

c.
Result in material misstatements of the Broker Dealer’s financial
statements;
or

d.
Result in violations of the Commission’s recordkeeping or financial
responsibility
rules to an extent that could reasonably be expected to result in the
conditions
described above.

If
conditions believed to be material weaknesses are found to exist or
have
existed during the year, the report should disclose the nature of the
weaknesses
and the corrective action taken or proposed to be taken by the Broker
Dealer.
If management has implemented control procedures to correct the
weaknesses,
the auditor should not refer to this corrective action in his or her
report
unless the auditor is satisfied that the procedures are suitably
designed
to correct the weakness and are being applied as prescribed.

1.
For each account, the following information:chanroblesvirtuallawlibrary

(a)
Customer's name, residence address and residence telephone;

(b)
Whether customer is of legal age;

(a)
Whether customer is an institutional customer;

(d)
Nationality;

(e)
Signature of the salesman introducing the account and signature of the
partner, officer or manager who accepts the account; and

(f)
The names of any person authorized to transact business on behalf of
the
entity if the customer is a corporation, partnership or other legal
entity.

2.
For each account other than an institutional account the Broker
Dealer
shall obtain, prior to the settlement of the initial transaction in the
account, the following information to the extent it is applicable to
the
account:chanroblesvirtuallawlibrary

(a)
Customer's tax identification number;

(b)
Occupation of customer and name and address and telephone number of
employer;

(c)
Whether the customer is employed by or otherwise associated with
another
Broker Dealer (e.g. officer, director, salesman, shareholder);

(d)
Whether the customer is an officer or director of a company listed on
an
exchange;

(e)
The customer's investment objective and other related information
concerning
the customer's financial situation and needs; and

(f)
If duplicate confirmations are required to be sent to another person,
the
identity of that person and his relationship to the customer.

(a)
Obtain the signature of each person authorized to exercise discretion
in
the account; and

(b)
Record the date such discretion is granted.

4.
For purposes of this Rule, institutional account shall mean the account
of:chanroblesvirtuallawlibrary

(a)
A bank, insurance company, or registered investment company;

(b)
Any other entity set forth in section 10.1(1) of the Code
as a qualified buyer; or

(c)
Any other entity (whether a natural person, corporation, partnership,
trust
or otherwise) with total assets of at least 1,200,000,000: Provided,
however, that the Broker Dealer shall obtain from such entity a
declaration,
under oath, confirming ownership of such assets.

5.
If more than one party is named on the account, new account information
shall be obtained for each party on the account.

6.
If the account is a trust account, a copy of the trust agreement shall
be obtained. The agreement shall specify the types of transactions that
the trustee is allowed to perform. These accounts can not be margin
accounts
unless specifically authorized by the trust agreement.

7.
A Broker Dealer is allowed to maintain a numbered account for a client
who wishes to keep his or her name confidential. If numbered accounts
are
used, the firm is obliged to keep on file the name of the customer and
a written statement signed by the customer showing that the customer
owns
the account.

8.
The format for a customer account information form is set forth
in “Annex I”.

SRC
Rule 52.1-7
Order
Ticket Rule

1.
Every order received by a Broker Dealer or any other associated person
or salesman of a Broker Dealer to buy or sell securities for customers
shall be entered on an order form, which shall contain at the minimum,
all the information required by this Rule. Each buying or selling order
form shall be time stamped by the Broker Dealer or any other associated
person or salesman of a Broker Dealer or any person acting on his
behalf
upon receipt of the customer’s order and upon transmission to the
trading
floor, if necessary. Time recording of subsequent action on an order,
whether
for amendment, cancellation or actual matching thereof, shall be
captured
by the computerized trading system of the Exchange or by time stamping,
for over-the-counter transaction. Any such information captured by the
computerized trading system of the Exchange shall be printed and made
available
for legal and/or audit purposes.

2.
All the necessary time recordings shall be disclosed in the
confirmation
to the customer upon his request.

3.
All Broker Dealers, who deal for their own account either directly or
where
a Member Broker Dealer, through another Member Broker, or trade for a
discretionary
account, as well as their partners, floor traders, officials and
employees,
shall record all purchase and sale orders on the same order
form used by such brokers for their customers, and such order forms
shall
also be time-stamped as required by paragraph (1) hereof, and comply
with
SRC Rule 34.1-2.

4.
Every Broker Dealer, associated person and salesman of a Broker
Dealer,
executing an order for a transaction in securities shall enter on the
order
ticket whether the transaction will be matched through the Exchange
trading
system or transacted as a block sale in accordance with SRC Rule
30.2-8,
whether the firm is acting as agent or principal in connection with the
transaction; provided, however, Member Brokers are required to
comply
with SRC Rule 34.1-2 when placing orders for their own account.

5.
In addition to the information required in paragraphs 1, 2 and 3 of
this
Rule, the order ticket shall reflect the terms and conditions of the
order
or instructions, including a notation if the order is a short sale, and
any subsequent modification or cancellation, the name of the customer
for
which the order was entered, the name of the salesman who
took
the order, the price at which executed, and whether the order was
solicited
or unsolicited.

(a)
For purposes of this rule, an order is solicited or unsolicited
depending
on who first mentioned the name of the security. If mentioned first by
the customer, the order should be marked unsolicited (regardless of who
initiated the phone call or other communication). If mentioned first by
the salesman, the order should be marked solicited.

(b)
The designation should be entered on real time on the order ticket and
indicated on the confirmation.

6.
An order is solicited or unsolicited depending on who recommends the
security.
If the order is recommended by the salesman, the order ticket should be
marked solicited. Otherwise, it should be marked unsolicited. The
designation
should be entered on real time on the order ticket and indicated on the
confirmation.

7.
All purchase and sale orders for the same security and under the same
terms
and conditions, including those placed by the Broker Dealer for its own
account or for discretionary accounts and those placed by partners,
floor
traders, officials and employees, shall be executed by the Broker
Dealer
in the order in which they were received: Provided, however,
Member Brokers shall comply with SRC Rule 34.1-2 regarding priority of
customer orders.

8.
All time stamping machines that are being used by Broker Dealers for
the
purposes of this Rule should be synchronized at all times in accordance
with the official time of the Exchange.

9.
A Broker Dealer may seek exemption from the paper format requirements
of
this Rule and instead apply for an electronic format. Such
application
has to be approved by the Commission.

SRC
Rule 52-1.8
Customer
Account Statements

1.
A Broker Dealer shall, with a frequency of not less than monthly, send
a statement of account containing a description of any securities
positions,
money balances, or account activity to each customer whose account had
a security position, money balance, or account activity during the
period
since the last such statement was sent to the customer.

2.
Such statement shall disclose that free credit balances are not
segregated
and may be used in the operation of the Broker Dealer and that such
funds
are payable on demand of the customer.

3.
For purposes of this Rule, the term account activity shall include, but
not be limited to, purchases, sales, interest credits or debits,
charges
or credits, dividend payments, transfer activity, securities receipts
or
deliveries, and/or journal entries relating to securities or funds in
the
possession or control of the Broker Dealer.

SRC
Rule 52.1-9

Customer
Complaint Rule

1.
Every Broker Dealer shall keep and preserve in each of its offices
either
a separate file of all written complaints of customers received by that
office and the action taken by the Broker Dealer or a separate record
of
such complaints and a clear reference to the files containing the
correspondence
connected with such complaint and maintained in such office.

2.
Every Broker Dealer shall keep in its main office either a duplicate
copy
of all written complaints of customers received by all offices of the
Broker
Dealer and the action taken in respect thereto or a separate record of
such complaints and a clear reference to the files containing the
correspondence
connected with such complaint.

3.
Complaint shall mean any written statement of a customer or any person
acting on behalf of a customer alleging a grievance involving the
activities
of those persons under the control of the Broker Dealer in connection
with
the solicitation or execution of any transaction, the disposition of
securities
or funds of that customer or any other aspect of the Broker Dealer's
business.

SRC
Rule 52.1-10

Quarterly
Securities Counts by Brokers Dealers

1.
This Rule shall apply to all Broker Dealers except those Broker Dealers
who promptly transmits all funds and delivers all securities received
in
connection with its activities as a Broker Dealer, and who do not
otherwise
hold securities for itself or hold funds or securities for, or owe
money
or securities to, customers.

2.
Any Broker Dealer who is subject to the provisions of this Rule shall
at
least once in each calendar quarter:chanroblesvirtuallawlibrary

(a)
Physically examine and count all securities held;

(b)
Account for all securities in transit, in transfer, pledged, loaned,
borrowed,
deposited, failed to receive, failed to deliver, subject to repurchase
and reverse repurchase agreements, or otherwise subject to its control
or direction but not in its physical possession by examination and
comparison
of the supporting detail records with the appropriate ledger control
accounts;

(c)
Verify all securities in transfer, in transit, pledged, loaned,
borrowed,
deposited, failed to receive, failed to deliver, subject to repurchase
and reverse repurchase agreements, or otherwise subject to its control
or direction but not in its physical possession, where such securities
have been in that status for longer than thirty (30) days;

(d)
Compare the results of the count and verification with its records; and

(e)
Record on its books and records all unresolved differences setting
forth
the security involved and date of comparison in a security count
difference
account no later than seven (7) business days after the date of each
required
quarterly security examination, count and verification in accordance
with
the requirements of paragraph (3) of this rule: Provided, however,
that no examination, count, verification and comparison for the purpose
of this rule shall be within two (2) months of or more than four (4)
months
following a prior examination, count, verification and comparison made
hereunder.

3.
The examination, count, verification and comparison may be made either
as of a date certain or on a cyclical basis covering the entire list of
securities. In either case the recording shall be effected within seven
(7) business days subsequent to the examination, count, verification
and
comparison of a particular security. In the event that an examination,
count, verification and comparison is made on a cyclical basis, it
shall
not extend over more than one calendar quarter, and no security shall
be
examined, counted, verified or compared for the purpose of this rule
less
than two (2) months or more than four (4) months after prior
examination,
count, verification and comparison.

4.
The examination, count, verification and comparison shall be made or
supervised
by persons whose regular duties do not require them to have direct
responsibility
for the proper care and protection of the securities or the making or
preservation
of the relevant records.

5.
The Commission and/or Exchange, if the Broker Dealer is a member of
that
Exchange, may, upon written request, exempt from the provisions of this
rule, either unconditionally or on specified terms and conditions, any
Broker Dealer who satisfies the Commission or that Exchange that it is
not necessary in the public interest and for the protection of
investors
to subject that particular Broker Dealer to certain or all of the
provisions
of this rule because of the special nature of the Broker Dealer's
business,
the safeguards it has established for the protection of customers'
funds
and securities, or such other reasons as may be deemed appropriate.

SRC
Rule 55.1
Settlement
Offers

1.
Any person who is notified that an investigation or proceeding has or
will
be instituted against him, or any party to a proceeding already
instituted,
may, at any time propose in writing to the Director of the Department
of
Compliance and Enforcement (CED) an offer of settlement (proposer).

An
offer of settlement shall state that it is being made pursuant to
Section
55 of the Code
and Rule 55.1 adopted thereunder, shall recite or incorporate as part
of
the offer the provisions of paragraphs 3 (d) and (e) of this Rule,
shall
be signed by the person making the offer, not by counsel, and shall be
submitted to the Director of CED.

2.
Consideration of Settlement Offers:chanroblesvirtuallawlibrary

(a)
Offers of settlement shall be considered when time, the nature of the
investigation
or proceeding, and the public interest permit.

(b)
The Director of CED shall consult with the person he has assigned to
the
matter (enforcement officer) and request his view regarding the
appropriateness
of the offer of settlement. Such request for such enforcement officer’s
view on a settlement offer or other participation in a settlement
conference
constitutes a waiver by the proposer of any right to claim bias or
prejudgement
by such enforcement officer based on the views expressed.

(c)
The Director of CED shall present the offer of settlement to the
Commission
with its recommendations: Provided, however, if the
Department’s
recommendation is unfavorable, the offer shall not be presented to the
Commission unless the proposer so requests in writing.

(d)
By submitting an offer of settlement, the proposer waives, subject to
the
acceptance of the offer:chanroblesvirtuallawlibrary

i.
all hearings pursuant to the statutory provisions under which the
investigation
or proceeding is to be or has been instituted;

ii.
the filing of proposed findings of fact and conclusions of law;

iii.
proceedings before, and an initial decision by, a the appropriate
office
or division of the Commission so delegated;

iv.
all post-hearing procedures; and

v.
judicial review by any court.

(e)
By submitting an offer of settlement, the proposer further waives:chanroblesvirtuallawlibrary

i.
Such provisions of law as may be construed to prevent any member of the
Commission’s staff from participating in the preparation of, or
advising
the Commission as to, any order, opinion, finding of fact, or
conclusion
of law to be entered pursuant to the order;

ii.
Any right to claim bias or prejudgement by the Commission based on the
consideration of discussions concerning settlement or all or any part
of
the proceeding.

(f)
If the Commission rejects the offer of settlement, the proposer shall
be
notified of the Commission’s action and the offer of settlement shall
be
deemed withdrawn. The rejected offer shall not constitute part of the
record
in any proceeding against the proposer: Provided, however, that
rejection of an offer of settlement does not affect the continued
validity
of waivers pursuant to paragraph 3(e) of this rule with respect to any
discussions concerning the rejected offer of settlement.

(g)
Final acceptance by the Commission of any offer of settlement will
occur
only upon the issuance of a summary of findings, and an order of the
Commission
and shall become effective only upon public disclosure thereof on the
Commission’s
web page and/or in such other manner. Such disclosure may be made
without
a determination of guilt on the part of the proposer and shall include
the name of the proposer, sections of the Code
and rules and regulations adopted thereunder involved, and applicable
conditions.

1.
Any person required to file any application, report or document
(hereinafter
collectively referred to as the “report”) with the Commission
under
Section 8 or 17 of the Code
may remove any confidential information from such required report,
provided
that he files with the Commission such confidential information in a
supplemental
report prominently labeled “CONFIDENTIAL”, together with a
request
for confidential treatment of the report and the specific grounds for
the
grant thereof and complies with this Rule: Provided, however,
that
the Commission may require disclosure of such confidential information.

2.
For purposes of this Rule, confidential information shall include, but
is not limited to, such matters as trade secrets, commercial or
financial
information that has been prepared by analysts within or outside a
company
for strategic purposes and similar information which raises concerns
for
business confidentiality.

3.
The Commission shall maintain the confidentiality of the information
contained
in the supplemental report, pending a determination by the Corporation
Finance Department in consultation with the Office of the General
Counsel
as to the validity of the request for confidential treatment.

4.
Within seven (7) days from receipt of the special report, the
Corporation
Finance Department shall make a determination regarding the
confidentiality
of the information contained in the supplemental report.

5.
If it is determined by the Corporation Finance Department that
confidential
treatment is not warranted with respect to all or part of the
information
in question, the person requesting confidential treatment of the
information
will be notified of this decision by telephone, followed up by written
notification sent by mail. Such notice will also advise such person
that
he has the right, which shall be exercised no later than within ten
(10)
days of receipt of notification by telephone, to request that the
Commission
en Banc reconsider such determination.

6.
A request for reconsideration shall be in writing and include
additional
factors for the Commission En Banc to consider.

7.
The Commission En Banc may reconsider such determination only
once
and its administrative decision shall not be subject to judicial review.

8.
If the Commission En Banc makes a determination that any or all
of the information in the supplemental report is not entitled to
confidential
treatment, the person who submitted the request shall promptly make an
amended filing with the Commission containing such information.

SRC
Rule 68
Special
Accounting Rules

1.
Application and Definition of Terms

a.
Application of this Rule

i.
This Rule (together with subsequent official pronouncements,
interpretations
and rulings on accounting and reporting matters, which may be issued by
the Commission from time to time) states the requirements applicable to
the form and content of financial statements required to be filed with
the Commission by corporations which are filing a securities
registration
statement under Section 12 of the Code
or which meet the following criteria with respect to the requirements
to
file reports:chanroblesvirtuallawlibrary

A.
issuers which have sold a class of their securities pursuant to a
registration
under Section 8 of the Code: Provided,
however, the obligation of such issuers to file reports shall be
suspended
for any fiscal year after the year such registration became effective
if
such issuer, as of the first day of any such fiscal year, has less than
100 holders of such class of securities or such other number as the
Commission
shall prescribe and it notifies the Commission of such;

B.
issuers with a class of securities listed for trading on an Exchange;
and

C.
issuers with assets of at least P50,000,000 or such other amount as the
Commission shall prescribe and having 200 or more holders each holding
at least 100 shares of a class of its equity securities as of the first
day of any fiscal year: Provided, however, that the
obligation of such issuers to file reports shall be terminated ninety
(90)
days after notification to the Commission by the issuer that the number
of its holders holding at least 100 shares is reduced to less than 100.

ii.
Unless otherwise specified, the term financial statements when used in
this Rule, shall include a balance sheet, a statement of income and
retained
earnings, and a statement of cash flows, together with all notes to the
statements and related schedules.

b.
Definition of Terms Used in this Rule

Unless
the context otherwise requires, the following terms shall have the
respective
meanings when used in this Rule.

i.
An affiliate of, or a person affiliated with, a specified person is a
person
that directly, or indirectly through one or more intermediaries,
controls,
or is controlled by, or is under common control with, the person
specified.

ii.
Audit (or examination), when used in regard to financial statements,
means
an examination of the statements by an independent certified public
accountant
in accordance with generally accepted auditing standards for the
purpose
of expressing an opinion thereon.

iii.
Auditor or independent auditor means an independent certified public
accountant
who performs an examination of financial statements for the purpose of
expressing an opinion on them.

iv.
Auditor's report when used in regard to financial statements, means a
document
in which an independent certified public accountant indicates the scope
of the audit (or examination) which he has made and sets forth his
opinion
regarding the financial statements taken as a whole, or an assertion to
the effect that an overall opinion cannot be expressed. When an overall
opinion cannot be expressed, the reason therefore shall be stated.

v.
Accounting principles includes not only accounting principles and
practices
but also the method of applying them. Generally accepted accounting
principles
means accounting principles based on pronouncements of recognized
bodies
involved in setting accounting principles. Greatest weight shall be
given
to their pronouncements in the order listed below:chanroblesvirtuallawlibrary

A.
Philippine Securities and Exchange Commission.

B.
Accounting Standards Council.

C.
Standards issued by the International Accounting Standards Committee.

D.
Accounting principles and practices for which there is a long history
of
acceptance and usage.

If
there appears to be a conflict between any of the bodies listed above,
the pronouncements of the first listed body shall be utilized.

vi.
Majority-owned subsidiary means a subsidiary more than fifty percent
(50%)
of whose outstanding securities representing the right, other than as
affected
by events of default, to vote for the election of directors, is owned
by
the subsidiary's parent and/or one or more of the parent's other
majority-owned
subsidiaries.

vii.
Parent of a specified person is an affiliate controlling such person
directly,
or indirectly, through one or more intermediaries.

viii.
Person means an individual, a corporation, a partnership, an
association,
a joint-stock company, a business trust, or unincorporated organization.

ix.
Registrant means an issuer of securities with respect to which a
securities
registration statement or required issuer report has been or is to be
filed.

x.
Related parties means affiliates of the enterprise, entities for which
investments are accounted for by the equity method by the enterprise;
trusts
for the benefit of employees, such as pension and profit sharing trusts
that are managed by or under the trusteeship of the management;
principal
owners of the enterprise; its management; members of the immediate
families
of principal owners of the enterprise and its management; and other
parties
with which the enterprise may deal if one party controls or can
significantly
influence the management or operating policies of the other to an
extent
that one of the transacting parties might be prevented from fully
pursuing
its own separate interests. Another party also is a related party if it
can significantly influence the management or operating policies of the
transacting parties or if it has an ownership interest in one of the
transacting
parties and can significantly influence the other to an extent that one
or more of the transacting parties might be prevented from fully
pursuing
its own separate interests.

xii.
Significant subsidiary means a subsidiary, including its subsidiaries,
which meets any of the following conditions:chanroblesvirtuallawlibrary

A.
The registrant’s and its other subsidiaries’ investments in and
advances
to the subsidiary exceed ten percent (10%) of the total assets of the
registrant
and its subsidiaries consolidated as of the end of the most recently
completed
fiscal year (for a proposed business combination to be accounted for as
a pooling of interests, this condition is also met when the number of
common
shares exchanged or to be exchanged by the registrant exceeds ten
percent
(10%) of its total common shares outstanding at the date the
combination
is initiated); or

B.
The registrant’s and its other subsidiaries' proportionate share of the
total assets (after inter company eliminations) of the subsidiary
exceeds
ten percent (10%) of the total assets of the registrant and its
subsidiaries
consolidated as of the end of the most recently completed fiscal year;
or

C.
The registrant’s and its other subsidiaries’ equity in the income from
continuing operations before income taxes, extraordinary items and
cumulative
effect of a change in accounting principle of the subsidiary exceeds
ten
percent (10%) of such income of the registrant and its subsidiaries
consolidated
for the most recently completed fiscal year.

COMPUTATIONAL
NOTE: For purposes of making the prescribed income test the
following
guidance should be applied:chanroblesvirtuallawlibrary

1.
When a loss has been incurred by either the parent and its subsidiaries
consolidated or the tested subsidiary, but not both, the equity in the
income or loss of the tested subsidiary should be excluded from the
income
of the registrant and its subsidiaries consolidated for the purposes of
the computation.

2.
If income of the registrant and its subsidiaries consolidated for the
most
recent fiscal year is at least 10 percent lower than the average of the
income for the last five (5) fiscal years, such average income should
be
substituted for purposes of the computation. Any loss years should be
omitted
for purposes of computing average income.

3.
Where the test involves combined entities, as in the case of
determining
whether summarized financial data should be presented, entities
reporting
losses shall not be aggregated with entities reporting income.

xii.
Subsidiary of a specified person is an affiliate controlled by such
person
directly, or indirectly through one or more intermediaries.

xiii.
Summarized financial information referred to in this Rule shall mean
the
presentation of summarized financial information as to the assets,
liabilities
and results of operations of the entity for which the information is
required.
Summarized financial information shall include the following
disclosures:chanroblesvirtuallawlibrary

A.
Current assets, noncurrent assets, current liabilities, noncurrent
liabilities,
and when applicable, redeemable preferred stocks [See Items (29)(D) and
(E) of ANNEX L] and minority interests (for specialized industries in
which
classified balance sheets are normally not presented, information shall
be provided as to the nature and amount of the major components of
assets
and liabilities);

B.
Net sales or gross revenues, gross profit (or, alternatively, costs and
expenses applicable to net sales or gross revenues), income or loss
from
continuing operations before extraordinary items and cumulative effect
of a change in accounting principle, and net income or loss (for
specialized
industries, other information may be substituted for sales and related
costs and expenses if necessary for a more meaningful presentation).

xiv.
Voting shares means the sum of all rights, other than as affected by
events
of default, to vote for election of directors.

2.
General Guides to Financial Statements Preparation

a.
Responsibility for Financial Statements

The
financial statements filed with the Commission are primarily the
responsibility
of the issuer and accordingly, the fairness of the representations made
therein is an implicit and integral part of the issuer's responsibility.

To
carry out the intent and attain the wisdom of this concept, management
of all corporations covered by this Rule are required to acknowledge
their
responsibility over their financial statements. For this purpose, the
financial
statements filed with the Commission shall be accompanied by a
statement
of management's responsibility as follows:chanroblesvirtuallawlibrary

STATEMENT
OF MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The
management of (name of registrant) is responsible for all information
and
representations contained in the financial statements for the year (s)
ended (date). The financial statements have been prepared
in
conformity with generally accepted accounting principles and reflect
amounts
that are based on the best estimates and informed judgment of
management
with an appropriate consideration to materiality.

In
this regard, management maintains a system of accounting and reporting
which provides for the necessary internal controls to ensure that
transactions
are properly authorized and recorded, assets are safeguarded against
unauthorized
use or disposition and liabilities are recognized.

The
Board of Directors reviews the financial statements before such
statements
are approved and submitted to the stockholders of the company.

(name
of auditing firm), the independent auditors appointed by the
stockholders,
have examined the financial statements of the company in accordance
with
generally accepted auditing standards and have expressed their opinion
on the fairness of presentation upon completion of such examination, in
their report to stockholders.

Signature
___________________________________________

Name
of Chief Executive Officer _________________________

Signature
___________________________________________

Name
of Chief Financial Officer __________________________

The
independent certified public accountant's responsibility for the
financial
statements required to be filed with the Commission is confined to the
expression of his opinion on such statements which he has examined.

b.
Consolidated balance sheets

i.
There shall be filed for the registrant and its subsidiaries
consolidated
audited balance sheets (except for filings on Form 17-Q, to which Part
VI is applicable), in a comparative format, as of the end of each of
the
two most recent fiscal years. If the registrant has been in existence
for
less than one fiscal year, there shall be filed an audited balance
sheet
as of a date within 135 days of the date of filing the registration
statement.

ii.
If a filing on SEC Form 12 -1 is made within one hundred five (105)
days
after the end of the most recently ended fiscal year, the filing shall
include audited consolidated balance sheets as of the end of each of
the
two (2) years prior to the most recently ended fiscal year and also an
interim balance sheet as of the end of the most recently ended fiscal
year.

iii.
If a filing on SEC Form 12 -1 is made more than one hundred five (105)
days but not more than one hundred thirty five (135) days after the end
of the most recently ended fiscal year, the filing shall include
audited consolidated balance sheets as of the end of each of the
two most recently ended fiscal years.

iv.
If a filing on SEC Form 12 -1 is made more than one hundred thirty five
(135) days but not more than two hundred twenty five (225) days after
the
end of the most recently ended fiscal year, the filing shall
include
audited consolidated balance sheets as of the end of each of the
two most recently ended fiscal years and also an interim balance sheet
as of the end of the first fiscal quarter subsequent to the most recent
fiscal year end.

v.
If a filing on SEC Form 12 -1 is made more than two hundred twenty five
(225) days but not more than three hundred fifteen (315) days
after
the end of the most recently ended fiscal year, the filing shall
include
audited consolidated balance sheets as of the end of each of the
two most recently ended fiscal years and also an interim balance sheet
as of the end of the second fiscal quarter subsequent to the most
recent
fiscal year end.

vi.
If a filing on Form 12 -1 is made more than three hundred fifteen (315)
days after the end of the most recently ended fiscal year, the
filing
shall include audited consolidated balance sheets as of the
end of each of the two most recently ended fiscal years and also an
interim
balance sheet as of the end of the third fiscal quarter subsequent to
the
most recent fiscal year end.

vii.
Any interim balance sheet provided in compliance with this subsection
may
be unaudited and need not be presented in greater detail than is
required
by Section 6 of this Rule.

c.
Consolidated statements of income and cash flows

i.
There shall be filed for the registrant and its subsidiaries
consolidated
and its predecessors, audited statements of income and of cash flows
for
each of the three fiscal years preceding the date of the most recent
audited
balance sheet being filed or such shorter period as the registrant
(including
predecessors) has been in existence.

ii.
In addition, statements of income and of cash flows shall be provided
for
any interim period between the latest audited balance sheet and the
date
of the most recent interim balance sheet being filed, and for the
corresponding
period of the preceding year. Such interim financial statements may be
unaudited and need not be presented in greater detail than is required
by Section 6 of this Rule.

d.
Financial statements of businesses acquired or to be acquired

i.
Financial statements required:chanroblesvirtuallawlibrary

A.
Financial statements prepared and audited in accordance with this Rule
should be furnished for the periods specified in paragraph (ii) below
if
any of the following conditions exist:chanroblesvirtuallawlibrary

I.
Consummation of a business combination accounted for as a purchase has
occurred or is probable (for purposes of this rule, the term
“purchase”
encompasses the purchase of an interest in a business accounted for by
the equity method); or

II.
Consummation of a business combination to be accounted for as a pooling
of interests is probable.

B.
For purposes of determining whether the provisions of this rule apply,
the determination of whether a “business” has been acquired
should
be made in accordance with the guidance set forth in Section 7 of this
Rule.

C.
If consummation of more than one transaction has occurred or is
probable,
the required financial statements may be presented on a combined basis,
if appropriate.

D.
This subsection shall not apply to a business which is totally
owned
by the registrant prior to consummation of the transaction.

ii.
Periods to be presented.

A.
If securities are being registered to be sold for cash, the audited
financial
statements specified in Section 2(b) and 2(c) of this Rule shall be
furnished
for the business to be acquired (See also Pro-Forma Financial
Information
requirements in Section 7). In all other cases, the financial
statements
specified in Sections 2(b) and 2(c) shall be furnished on an audited
basis
to the extent practicable for the business to be acquired. The periods
for which such financial statements are to be filed shall be determined
using the conditions specified in the definition of “significant
subsidiary”
in Section 1(b)(xi).

I.
If none of the conditions exceeds ten percent (10%), financial
statements
are not required. However, if the aggregate impact of the individually
insignificant businesses acquired since the date of the most recent
audited
balance sheet filed for the registrant exceeds twenty percent (20%),
financial
statements covering at least the substantial majority of the businesses
acquired, combined if appropriate, shall be furnished. Such
financial
statements shall be for at least the most recent fiscal year and any
interim
periods specified in Sections 2(b) and 2(c) of this Rule.

II.
If any of the conditions exceeds ten percent (10%), but none exceed
twenty
percent (20%), financial statements shall be furnished for at least the
most recent fiscal year and any interim periods specified in Sections
2(b)
and 2(c) of this Rule.

III.
If any of the conditions exceeds twenty percent (20%) but none exceed
forty
percent (40%), financial statements shall be furnished for at least the
two most recent fiscal years and interim periods specified in Sections
2(b) and 2(c) of this Rule.

IV.
If any of the conditions exceeds forty percent (40%), the full
financial
information specified in Sections 2(b) and 2(c ) of this Rule shall be
furnished.

V.
The determinations under subparagraphs (I),(II), (III), and (IV) shall
be made by comparing the most recent annual financial statements of
each
such business to the registrant’s most recent annual consolidated
financial
statements filed at or prior to the date of acquisition. However, if
the
registrant made a significant acquisition subsequent to the latest
fiscal
year-end and filed a report on Form 17-C which included audited
financial
statements of such acquired business for the periods required by this
subsection
and the pro forma financial information required by Section 7, such
determination
may be made by using the pro forma amounts for the latest fiscal year
in
the report on Form 17-C rather than by using the historical amounts for
the latest fiscal year of the registrant. The tests may not be made by
“annualizing” data.

VI.
Notwithstanding the requirements in subsection (d)(ii)(A) above,
separate
financial statements of the acquired business need not be presented
once
the operating results of the acquired business have been reflected in
the
audited consolidated financial statements of the registrant for a
complete
fiscal year unless such financial statements have not been previously
filed
or unless the acquired business is of such significance to the
registrant
that omission of such financial statements would materially impair an
investor’s
ability to understand the historical financial results of the
registrant.
For example, if, at the date of acquisition, the acquired business met
at least one of the conditions in the definition of “significant
subsidiary”
in Section 1(b)(xi) at the 60 percent (60%) level the income statements
of the acquired business should normally continue to be furnished for
such
periods prior to the purchase as may be necessary when added to the
time
for which audited income statements after the purchase are filed to
cover
the equivalent of the period specified in Section 2(c)(i).

VII.
A separate audited balance sheet of the acquired business is not
required
when the registrant’s most recent audited balance sheet required by
Section
2(b) is for a date after the date the acquisition was consummated.

e.
Separate financial statements of subsidiaries not consolidated and
fifty
percent (50%) or less owned persons

i.
If any of the conditions set forth in the definition of “significant
subsidiary” in Section I(b)(xi), substituting twenty percent (20%)
for ten percent (10%) in the tests used therein to determine a
significant
subsidiary are met for a majority-owned subsidiary not consolidated by
the registrant or by a subsidiary of the registrant, separate financial
statements of such subsidiary shall be filed. Similarly, if any of the
conditions set forth therein, substituting twenty percent (20%) for ten
percent (10%), are met by a fifty percent (50%) or less owned person
accounted
for by the equity method either by the registrant or a subsidiary of
the
registrant, separate financial statements of such fifty percent (50%)
or
less owned person shall be filed.

ii.
Insofar as practicable, the separate financial statements required by
this
Part shall be as of the same dates and for the same periods as the
audited
consolidated financial statements required by Sections 2(b) and 2(c).
However,
these separate financial statements are required to be audited only for
those fiscal years in which any of the conditions described in the
definition
of “significant subsidiary” in Section I(b)(xi), substituting
20
percent (20%) for 10 percent (10%), are met.

iii.
Notwithstanding the requirements for separate financial statements in
paragraph
(e)(i) above, where financial statements of two or more majority-owned
subsidiaries not consolidated are required, combined or consolidated
statements
of such subsidiaries may be filed subject to principles of inclusion
and
exclusion which clearly exhibit the financial position, cash flows and
results of operations of the combined or consolidated group. Similarly,
where financial statements of two or more 50 percent or less owned
persons
are required, combined or consolidated statements of such persons may
be
filed subject to the same principles of inclusion or exclusion referred
to above.

f.
Age of financial statements at effective date of a registration
statement
on SEC Form 12-1

At
the time a registration statement on SEC Form 12-1 is to become
effective,
the financial information therein must be as of a date within 135 days
of the effective date. Interim financial statements required to be
included
in a registration statement which are necessary to keep the
registration
statement current need not be audited and need not be in greater detail
than required by Section 6 of this Rule.

g.
Comparative Statements

i.
The financial statements to be filed with the Commission shall be
presented
in comparative form. However, the presentation of comparative figures
need
not be applied to related schedules to be filed under this Rule.

ii.
An explanation through a note or otherwise shall be made explaining the
reasons for filing a single-period statement, e.g. it is the
first
period of a new company.

iii.
When financial statements are presented on a comparative basis for more
than the periods required, the auditor's report need not extend to
prior
period's for which the financial statements are not required to be
audited:chanroblesvirtuallawlibrary

A.
If the financial statements of the prior year were not audited, such
statements
should be marked prominently as "UNAUDITED." In addition, the
auditor
should disclose this fact in his report by a statement to that effect
in
a separate paragraph after the opinion paragraph.

B.
If the financial statements of a prior-period have been examined by
another
independent certified public accountant whose report is not presented,
the statements should be marked to disclose prominently that they are
not
being reported upon herein by the previous auditor. If the auditor of
the
financial statements for such periods did not give a “clean”
opinion
on such statements, the auditor for the current year should indicate in
the scope paragraph of his report (I) that the financial statements of
the prior-period were examined by other auditors, (II) the date of
their
report (III) the type of opinion expressed by the predecessor auditor
and
(IV) the substantive reasons it was qualified.

h.
Form, Order and Terminology

i.
Financial statements should be filed in such form and order, and should
use such generally accepted terminology as will best indicate their
significance
and character in the light of the provisions applicable thereto. The
information
required with respect to any statement shall be furnished as a minimum
requirement to which shall be added such further material information
as
is necessary to make the required statements, in the light of the
circumstances
under which they are made, not misleading.

Financial
statements filed with the Commission should be prepared in accordance
with
generally accepted accounting principles [See definition in Section
1(b)(v)].
This Part and other parts of this Rule provide clarification of certain
disclosures which must be included in financial statements filed with
the
Commission.

ii.
All money amounts required to be shown in financial statements may be
expressed
in whole pesos or multiples thereof, as appropriate: provided, that
when
stated in other than whole pesos, an indication to that effect is
inserted
immediately beneath the caption of the statement or schedule, at the
top
of the money columns, or at an appropriate point in narrative material.

iii.
Negative amounts shall be shown in a manner which clearly distinguishes
the negative attribute. When determining methods of display,
consideration
should be given to the limitations of reproduction and microfilming
processes.

iv.
The chronological ordering of data may be with the most recent date to
the right or to the left. However, the ordering used must be consistent
in all financial statements, tabular data and footnote data in the
document.

i.
Items Not Material

If
the amount which would otherwise be required to be shown with respect
to
any item is not material, it need not be separately set forth. The
combination
of insignificant amounts is permitted.

i.
No caption should be shown in any financial statement as to which the
items
and conditions are not present.

ii.
Financial statements not required or inapplicable because the required
matter is not present need not be filed.

iii.
The reasons for the omission of any required financial statements shall
be indicated.

k.
Current Assets and Current Liabilities

Assets
classed with current assets shall be reasonably expected to be realized
in cash or sold or consumed during the normal operating cycle of the
business
or within one year if the operating cycle is shorter than one year.

Current
liabilities are obligations that are reasonably expected to be
liquidated
through the use of existing current assets or the creation of other
current
liabilities within the normal operating cycle of the business or one
year,
whichever is longer.

Where
a particular business has no clearly defined operating cycle, the one
year
rule should govern. However, if a company's normal operating cycle is
longer
than one year, generally recognized trade practices should be followed
with respect to the inclusion or exclusion of items in current assets
or
current liabilities. An appropriate explanation of the circumstances
should
be made and, if practicable, an estimate should be given of the amount
not realizable or payable within one year. The amounts maturing in each
year (if practicable) along with the interest rates or range shall also
be disclosed.

The
captions current assets and current liabilities are not required for
companies
in some industries which, because of the nature of their business, do
not
normally distinguish current assets and current liabilities from
non-current.

l.
Requirements of Rule 68 Not Applicable to Annual Reports to Shareholders

The
schedules required by Section 4(e) and set forth in “Annex N” of
SRC Rule 68 and the separate financial statements of subsidiaries not
consolidated
and 50 percent or less owned persons required by Section 2(e) are not
required
in annual reports to shareholders. However, if the financial statements
required by Section 2(e) are included in annual reports to
shareholders,
the requirements of Section 5(f)(ii) as to footnote disclosures about
such
investments need not be provided. (Footnotes in the annual report to
shareholders
should be the same as the footnotes included in the report on Form
17-A.)
Also, if the principal accountant relied on the work of other
accountants,
the report of the other accountants which is required by Section 3(d)
is
not required in annual reports to shareholders.

m.
General Notes to Financial Statements

Furnish
the information set forth in “Annex J”.

3.
Qualifications and Reports of Independent Auditors

a.
Examination of Financial Statements by Independent Auditors

The
Commission will not accept financial statements required to be audited
unless such financial statements are accompanied by an auditor's report
issued by an independent auditor.

b.
Qualifications of Independent Auditors

i.
The Commission will not recognize any person as an independent auditor
who is not in good standing and entitled to practice as such under the
laws governing the practice of public accounting in the Philippines.

ii.
The term independent auditor as used in the foregoing paragraph is an
auditor
who possesses the independence as defined in Part II Section 14 of the
Code of Professional Ethics for Certified Public Accountants as
promulgated
by the Board of Accountancy and approved by the Professional Regulation
Commission.

Independence
will be considered to be impaired if:chanroblesvirtuallawlibrary

A.
During the period of his professional engagement, or at the time of
expressing
his opinion, he:chanroblesvirtuallawlibrary

I.
Had or was committed to acquire any direct or material indirect
financial
interest in the enterprise; or

II.
Had any joint closely-held business investment with the enterprise or
any
officer, director or principal stockholder thereof; or

III.
Had any loan to or from the enterprise or any officer, director or
principal
stockholder thereof.

B.
During the period covered by the financial statements and during the
period
of the professional engagement or at the time of expressing an opinion,
he:chanroblesvirtuallawlibrary

I.
Was connected with the enterprise as a promoter, underwriter or voting
trustee, a director or officer or in any capacity equivalent to that of
a member of management or of an employee, or

II.
Was a trustee of any trust or executor or administrator of any estate
if
such trust or estate had a direct or material indirect financial
interest
in the enterprise; or was a trustee for any pension or profit-sharing
trust
of the enterprise.

The
above examples are not intended to be all-inclusive.

Independence
may be impaired by the financial interests and business relationships
of
the CPA's spouse, dependent children or any relative living in a common
household with or supported by the CPA. The financial interests or
business
relationships of such family, dependents or relatives in a CPA's client
are ascribed to the CPA; in such circumstances the independence of the
CPA or his firm would be impaired.

iii.
In determining whether an auditor may in fact be not independent with
respect
to a particular issuer, the Commission will give appropriate
consideration
to all relevant circumstances, including evidence bearing on all
relationships
between the auditor and that issuer or any affiliate thereof.

c.
Reports of Independent Auditors

i.
Technical
Requirements - The auditor's report shall: (A) be dated; (B) be
manually
signed; (C) identify the financial statements covered by the report;
(D)
state the certifying accountant's PTR number; (E) state the complete
mailing
address of the client and the auditor; and (F) clearly indicate the
name
of the certifying partner, where the certification is made under a firm
name.

ii.
Representations
as to the Audit - The auditor's report shall state whether the
examination
was made in accordance with generally accepted auditing standards and
shall
designate any auditing procedures deemed necessary by the auditor under
the circumstances of the particular case, which have been omitted, and
the reasons for their omission. This rule, however, shall not be
construed
to imply authority for the omission of any procedure which independent
auditors would ordinarily employ in the course of an audit made for the
purpose of expressing the opinion required by paragraph (iii) below.

iii.
Opinion
to be Expressed - The auditor's report shall state clearly: (A) the
opinion of the independent auditor in respect of the financial
statements
covered by the report and the accounting principles and practices
reflected
therein; (B) the opinion of the independent auditors as to the
consistency
of the application of such accounting principles, or as to any changes
in such principles which have a material effect on the financial
statements.

iv.
Exceptions - Any matters to which the independent certified
public
accountant
takes exception shall be clearly identified, the exception thereto
specifically
and clearly stated and to the extent practicable, the effect of each
such
exception on the related financial statements given. In cases when
financial
statements filed with the Commission pursuant to its rules and
regulations
are prepared in accordance with accounting principles for which there
is
no substantial authoritative support, such financial statements will be
presumed to be misleading or inaccurate despite disclosures contained
in
the report of the accountant or in footnotes to the financial
statements
provided the matters involved are material.

In
cases where there is a difference of opinion between the Commission and
the registrant as to the proper principles of accounting to be
followed,
disclosure will be accepted in lieu of correction of the financial
statements
themselves only if the points involved are such that there is
substantial
authoritative support for the practices followed by the registrant and
the position of the Commission has not previously been expressed in
rules,
regulations or other official pronouncements of the Commission.

v.
Special report at time of first filing by accountant -

All
financial statements to be submitted by a corporation to the Securities
and Exchange Commission which are required to be certified by an
independent
Certified Public Accountant, shall in addition to the report of the
certifying
CPA, be accompanied by the statement that follows. The statement of
representation
shall be required to be filed only once with the Commission and shall
be
considered as forming part of all financial statements presented to the
Commission, bearing the signature of the CPA practitioner.

“TO THE SECURITIES AND EXCHANGE COMMISSION:chanroblesvirtuallawlibrary

In
connection with my examination of the financial statements of client
corporations,
which are to be submitted to the Commission, I hereby represent the
following:chanroblesvirtuallawlibrary

1.
That said financial statements are presented in conformity with
generally
accepted accounting principles in all cases where I shall express an
unqualified
opinion; Except that in case of any departure from such principles, I
shall
indicate the nature of the departure, the effects thereof, and the
reasons
why compliance with the principles would result in a misleading
statement,
if such is a fact;

2.
That I shall fully meet the requirements of independence as provided in
Section 14 of the Code of Professional Ethics for CPAs;

3.
That in the conduct of the audit, I shall comply with the generally
accepted
auditing standards promulgated by the Board of Accountancy; in case of
any departure from such standards or any limitation in the scope of my
examination, I shall indicate the nature of the departure and the
extent
of the limitation, the reasons therefore and the effects thereof on the
expression of my opinion or which may necessitate the negation of the
expression
of an opinion; and

4.
That relative to the expression of my opinion on the said financial
statements,
I shall not commit any acts discreditable to the profession as provided
in Section 23 of the Code of Professional Ethics for CPAs.

As
a CPA engaged in public practice, I make these representations in my
individual
capacity and as a partner in the accounting firm of

If,
with respect to the examination of the financial statements, part of
the
examination is made by an independent Certified Public Accountant other
than the principal accountant and the principal accountant elects to
place
reliance on the work of the other accountant and makes reference to
that
effect in his report, the separate report of the other accountant shall
be filed. However, notwithstanding the provisions of this Section,
reports
of other accountants which may otherwise be required in filings need
not
be presented in annual reports to security holders.

4.
Commercial and Industrial Companies

a.
This Section shall be applicable to financial statements filed for all
issuers of securities engaged in commercial and industrial activities,
except banks, insurance companies and public utilities, as to which
copies
of their financial statements, as submitted to the appropriate
government
offices, shall be furnished to the Commission.

b.
Balance Sheet - Form of Statement

Except
as otherwise permitted by the Commission, the various line items and
certain
additional disclosures set forth in “Annex K” if applicable,
should
appear on the face of the balance sheets or related notes filed by the
persons to whom this Section pertains.

c.
Statement(s) of Income and Retained Earnings - Form of Statement

The
statement of income and retained earnings may be combined to form one
statement.
When the number of changes in retained earnings during the period or
periods
covered so warrant, a separate statement of retained earnings should be
prepared.

Except
as otherwise permitted by the Commission, the various line items and
certain
additional disclosures set forth in “Annex L”, if applicable,
should
appear on the face of the income statements or related notes filed by
the
persons to whom this Section pertains.

d.
Statement of Cash Flows - Form of Statement

When
statements purporting to present both financial position and results of
operations are issued, a statement of cash flows should be presented as
a basic financial statement for the period for which an income
statement
is presented.

The
statement of cash flows filed by issuers of securities to whom this
Section
is applicable shall comply with the presentation and disclosure
requirements
under generally accepted accounting principles.

e.
Schedules to be Filed

i.
Except as expressly provided otherwise, the schedules specified below
shall
be filed for each period for which statements of income are required.
(For
the form and contents of the schedules, refer to “Annex M”.

ii.
Any of the schedules required may be omitted if the information
required
by the schedule (including the notes thereto) is shown in the related
financial
statements or in a note thereto.

iv.
In a registration statement filed on SEC Form 12-1, the Schedules need
not be included in Part I - Information Required in Prospectus, but may
be included in Part II - Information Not Required in Prospectus.

1.
In support of the caption Current Marketable Equity Securities in the
balance
sheet, if the greater of the aggregate cost or the aggregate market
value
of current marketable equity securities as of the balance sheet date
constitute
10 per cent or more of total assets.

2.
In support of the caption Other Short Term Cash Investments, if the
amount
at which other short-term cash investments shown in the balance sheet
constitutes
10 per cent or more of total assets, and

3.
In support of the caption Current Marketable Equity Securities and
Other
Short Term Cash Investments in the balance sheet, if the greater of the
aggregate cost or the aggregate market value of current marketable
equity
securities plus the amount at which other short term cash investments
is
shown in the balance sheet as of the balance sheet date.

This
schedule shall be filed with respect to each person among the
directors,
officers, employees, and principal stockholders (other than affiliates)
from whom an aggregate indebtedness of more than P100,000 or one per
cent
of total assets, whichever is less, is owed. For the purposes of this
schedule,
exclude in the determination of the amount of indebtedness all amounts
receivable from such persons for purchases subject to usual terms, for
ordinary travel and expense advances and for other such items arising
in
the ordinary course of business.

Schedule
C. Non-Current Marketable Equity Securities, Other Long-Term
Investments
in Stocks, and Other Investments - This schedule shall be filed in
support of the respective captions on long-term investments in the
balance
sheet. This schedule may be omitted if:chanroblesvirtuallawlibrary

1.
The sum of the captions Non-Current Marketable Equity Securities, Other
Long-Term Investments, and Other Investments in the related balance
sheet
does not exceed five per cent of total assets as shown in the related
balance
sheet at either the beginning or end of the period; or

2.
There have been no material changes in the information required to be
filed
from that last previously reported.

Schedule
D. Indebtedness of Unconsolidated Subsidiaries and Affiliates -
The Schedule shall be filed in support of the caption Indebtedness of
Unconsolidated
Subsidiaries and Affiliates in the balance sheet. This schedule may be
omitted if:chanroblesvirtuallawlibrary

1.
The amount of all indebtedness of Affiliates to the registrant in such
balance sheet does not exceed five per cent of total assets as shown in
the related balance sheet at either the beginning or end of the period
or

2.
There have been no material changes in the information required to be
filed
from that last previously reported.

Schedule
E. Property, Plant and Equipment - This Schedule shall be filed
in support of the caption Property, Plant and Equipment in the balance
sheet, provided that this schedule may be omitted if:chanroblesvirtuallawlibrary

1.
The total shown under this caption does not exceed twenty-five per
cent
of total assets as shown by the related balance sheet at both the
beginning
and end of the period; and

2.
Neither the additions nor the deductions during the period exceeded
five
per cent of total assets as shown by the related balance sheet at
either
the beginning or end of the period.

Schedule
F. Accumulated depreciation - This schedule shall be filed in
support
of the caption accumulated depreciation in the balance sheet. This
schedule
may be omitted if Schedule E is not required.

Schedule
G. Intangible Assets and Other Assets - Part A of this
Schedule
shall be filed in support of the caption intangible assets and Part B
shall
be filed in support of the caption Other Assets in the balance sheet
provided
that either part may be omitted if:chanroblesvirtuallawlibrary

1.
the total shown by the related balance sheet caption does not exceed
five
per cent of total assets as shown in the related balance sheet at both
the beginning and end of the period; and

2.
neither the additions nor the deductions during the period exceeded
five
per cent of total assets as shown by the related balance sheet at
either
the beginning or end of the period

Schedule
H. Long-Term Debt - This schedule shall be filed in support of
the
caption Long-Term Debt in the balance sheet.

Schedule
I. Indebtedness to Affiliates and Related Parties -
This schedule shall be filed to list the total of all non current
Indebtedness
to Affiliates and Related Parties included in the balance sheet. This
schedule
may be omitted if:chanroblesvirtuallawlibrary

1.
The total Indebtedness to Affiliates and Related Parties included
in such balance sheet does not exceed five per cent of total
assets
as shown in the related balance sheet at either the beginning or end of
the period; or

2.
There have been no changes in the information required to be
filed
from that last previously reported.

Schedule
J. Guarantees of Securities of Other Issuers - This
schedule
shall be filed with respect to any guarantees of securities of other
issuing
entities by the issuer for which the statement is filed.

Schedule
K. Capital Stock - This schedule shall be filed in support of
caption
Capital Stock in the balance sheet.

5.
Consolidated Financial Statements

a.
As a general rule, consolidated financial statements should include the
statements of the parent company and all its subsidiaries, except those
described in paragraph (d) below.

b.
Even if the parent and its subsidiaries are engaged in dissimilar
activities
(i.e., some entities in the group are engaged in Manufacturing,
Merchandising or other non financial activities, while the other
entities
are engaged in financial activities, such as banking, insurance,
financing),
consolidated financial statements shall be presented for the group.

c.
Consolidation of Non-Subsidiaries:chanroblesvirtuallawlibrary

A
company in which a group does not have control, but in which a group:chanroblesvirtuallawlibrary

i.
Owns more than half the equity capital, but less than half the voting
power;
and

ii.
Has the power to control, by statute or agreement, the financial and
operating
policies of the company, with or without more than one-half of the
equity,
shall be treated as a subsidiary and included in the consolidated
financial
statements.

d.
Exclusion from Consolidation:-

A
subsidiary should be excluded from consolidation if:chanroblesvirtuallawlibrary

i.
Control is likely to be temporary as, for example, when a subsidiary
must
be disposed of under court order or will be abandoned if certain likely
adverse contingencies materialize.

ii.
Control does not rest with the majority owners as, for instance, when
the
subsidiary is in legal reorganization or in bankruptcy, or operates
under
foreign exchange restrictions, controls, or other governmentally
imposed
uncertainties so severe that they cast significant doubt on the
parent's
ability to control the subsidiary.

e.
Consolidation of Subsidiaries with Different Fiscal Periods -

A
difference in fiscal periods of a parent and subsidiary does not itself
justify the exclusion of the subsidiary from consolidation. It
ordinarily
is feasible for the subsidiary to prepare, for consolidation purposes,
statements for a period that corresponds with or closely approaches the
fiscal period of the parent. However, if the difference is not more
than
three months, it usually is acceptable to use, for consolidation
purposes,
the subsidiary's statements for its fiscal period; when this is done
recognition
shall be given by disclosure or otherwise to the effect of intervening
events that materially affect the financial position or results of
operations.
In addition, the consistency principle dictates that the length of the
reporting periods and any difference in the balance sheet dates should
be considered from period to period.

f.
Disclosure of Principles of Consolidation

i.
General Disclosures

The
following disclosures should be made in consolidated statements or the
accompanying notes:chanroblesvirtuallawlibrary

A.
The consolidation policy being followed, including a description of the
bases on which subsidiaries and associated companies have been dealt
with.

B.
General identification (e.g., "all subsidiaries" or "all
unconsolidated subsidiaries") of the entities included, if not
stated
in the financial statement captions. Desirably, an appropriate listing
and description of significant subsidiaries included in consolidation
should
be provided.

C.
The name of subsidiaries not consolidated and the reasons for not
consolidating
such subsidiaries unless otherwise evident.

D.
Changes in the entities included and the reasons and effects on income
thereof.

E.
If differences in fiscal periods exist and the effect could be
significant,
the fiscal periods of the entities' statements and any changes in such
periods. In addition, the effects of intervening material events and
transactions
should be disclosed.

F.
The nature of the relationship between the parent company and a company
that is not a subsidiary but is treated as a subsidiary in
consolidation,
[Section 5(c) above] and the reasons for consolidating such company.

G.
The amounts of any material intercompany balances or transactions not
eliminated
and the reasons hereof

H.
If the exercise of outstanding conversion privileges or stock options
and
warrants of a subsidiary could have a significant effect on
consolidated
income, the existence of such stock rights and the effects if
exercised.
However, when a subsidiary is experiencing losses and it is not likely
that the stock rights will be exercised, disclosure of the effects
should
be made.

I.
The policy followed with respect to providing taxes on undistributed
earnings
of subsidiaries and the cumulative amount of undistributed earnings, if
any, of such subsidiaries included in the consolidated retained
earnings,
for which taxes have not been provided.

J.
Restrictions on consolidated retained earnings (statutory or
contractual),
including those relating to legal reserves and capitalized earnings of
and restrictions imposed on subsidiaries.

K.
When the consolidated entities follow different accounting policies,
desirably
the proportion of the assets, liabilities, revenue or expenses, as
appropriate,
to which the different policies apply.

L.
Desirably, what portions of long-term debt are those of the parent and
what portions are those of the subsidiaries.

ii.
Disclosure about Subsidiaries Not Consolidated and 50 Percent or Less
Owned
Persons

A.
In addition to the separate financial statements required by Section
2(e)
separate summarized financial information (see definitions in Section
I(b)(xiii)
shall be furnished in the footnotes for each significant subsidiary not
consolidated and for each 50 percent or less owned person.
Notwithstanding
the requirement for separate summarized financial information for each
significant subsidiary, where summarized financial information of two
or
more majority-owned subsidiaries not consolidated are required,
combined
or consolidated summarized financial information of such subsidiaries
may
be filed subject to principles of inclusion and exclusion which clearly
exhibit the financial position, cash flows and results of operations of
the combined or consolidated group.

Similarly,
where summarized financial information of two or more 50 percent or
less
owned persons are required, combined or consolidated summarized
financial
information of such persons may be filed subject to the same principles
of inclusion or exclusion referred to above.

B.
Summarized financial information shall be furnished in the aggregate
for
(A) subsidiaries not consolidated and (B) 50 percent or less owned
persons,
not reported upon pursuant to (A) hereof. If in the aggregate, either
subsidiaries
not consolidated or 50 percent or less owned persons would not
constitute
a significant subsidiary, it may be stated that such groupings would
not
constitute a significant subsidiary and summarized financial
information
is not required.

i.
If the issuer and its subsidiaries are engaged in dissimilar
activities,
consolidated financial statements as required. However, disclosure of
summarized
financial information (See Section 1(b)(xiii), definitions) for certain
subsidiaries or group of subsidiaries in the consolidated financial
statements
is generally considered to be desirable for an understanding of the
operations
of the group. Hence, when these subsidiaries are material in relation
to
consolidated financial position or results of operations, separate
summarized
financial information shall be presented for:chanroblesvirtuallawlibrary

A.
Subsidiaries whose activities are dissimilar from those of the other
companies
in the group.

B.
Foreign subsidiaries.

C.
Each significant financial subsidiary or group of financial
subsidiaries,
if the issuer and its subsidiaries are engaged in one or more types of
financial activities (e.g. banking, insurance and finance).

D.
Subsidiaries related to whichever activity group is more significant,
if
the issuer and its subsidiaries are engaged in both non-financial and
financial
activities.

h.
Elimination of Intercompany Items and Transactions

The
following are eliminated in consolidation:chanroblesvirtuallawlibrary

i.
Intercompany open account balances such as intercompany receivables and
payables.

ii.
Intercompany transactions, including intercompany sales and purchases,
intercompany charges (such as rents, interests) and intercompany
dividends.
In eliminating dividends, the portion not paid to the parent or other
subsidiaries
should be charged to the minority interests.

iii.
The cost or carrying value to the parent company of its investment in
each
subsidiary and the portion applicable to the parent company of the
equity
accounts (such as capital stock, additional paid-in capital, treasury
shares,
retained earnings appropriations) of each subsidiary.

iv.
Unrealized intercompany profits and losses (i.e., any intercompany
profit
or loss on assets such as inventories and property, plant and
equipment,
remaining within the group).

Parent
Company Statements

In
some cases parent company statements may be needed, in addition to
consolidated
statements, to indicate adequately the position of bondholders and
other
creditors or preferred stockholders of the parent company.
Consolidated statements, in which one column is used for the parent
company
and other columns for particular subsidiaries or groups of
subsidiaries,
often are an effective means of presenting the pertinent information.

6.
Interim Financial Statements

a.
Interim financial statements

i.
Condensed
statements. - Interim financial statements shall follow the general
form and content of presentation prescribed by the other items of SRC
Rule
68 with the following exceptions:chanroblesvirtuallawlibrary

A.
Interim financial statements required by this Section need only be
provided
as to the registrant and its subsidiaries consolidated and may be
unaudited.
(Separate statements of other entities which may otherwise be required
by SRC Rule 68 may be omitted.)

B.
Interim balance sheets shall include only major captions (i.e. numbered
captions) prescribed by the applicable subsections herein with the
exception
of inventories. Data as to raw materials, work in process and finished
goods inventories shall be included either on the face of the balance
sheet
or in the notes to the financial statements, if applicable. Where any
major
balance sheet caption is less than 10% of total assets, and the amount
in the caption has not increased or decreased by more than 25% since
the
end of the preceding fiscal year, the caption may be combined with
others.

C.
Interim statements of income shall also include major captions
prescribed
by the applicable subsections herein. When any major income statement
caption
is less than 15% of average net income for the most recent three fiscal
years and the amount in the caption has not increased or decreased by
more
than 20% as compared to the corresponding interim period of the
preceding
fiscal year, the caption may be combined with others. In calculating
average
net income, loss years should be excluded. If losses were incurred in
each
of the most recent three years, the average loss shall be used for the
purpose of this test. Notwithstanding these tests, Section 2(i) applies
and minimal amounts therefore need not be shown separately.

D.
The statement of changes in cash flows may be abbreviated, starting
with
a single figure of funds provided by operations and showing other
changes
individually only when they exceed 10% of the average of funds provided
by operations for the most recent three years. Notwithstanding this
test,
Section 2(i) applies and minimal amounts therefore need not be shown
separately.

E.
The interim financial information shall include disclosures either on
the
face of the financial statements or in accompanying footnotes
sufficient
so as to make the interim information presented not misleading.
Registrants
may presume that users of the interim financial information have read
or
have access to the audited financial statements for the preceding
fiscal
year and that the adequacy of additional disclosure needed for a fair
presentation,
except in regard to material contingencies, may be determined in that
context.
Accordingly, footnote disclosure which would substantially duplicate
the
disclosure contained in the most recent annual report to security
holders
or latest audited financial statements, such as a statement of
significant
accounting policies and practices, details of accounts which have not
changed
significantly in amount or composition since the end of the most
recently
completed fiscal year, and detailed disclosures prescribed by Section
2(m)
of this Rule, may be omitted. However, disclosure shall be provided
where
events subsequent to the end of the most recent fiscal year have
occurred
which have a material impact on the registrant. Disclosures should
encompass
for example, significant changes since the end of the most recently
completed
fiscal year in such items as: accounting principles and practices;
estimates
inherent in the preparation of financial statements; status of
long-term
contracts; capitalization including significant new borrowings or
modification
of existing financing arrangements; and the reporting entity resulting
from business combinations or dispositions. Notwithstanding the above,
where material contingencies exist, disclosure of such matters shall be
provided even though a significant change since year end may not have
occurred.

F.
Detailed schedules otherwise required by this Rule may be omitted for
purposes
of preparing interim financial statements.

ii.
Other
instructions as to content. - The following additional instructions
shall be applicable for purposes of preparing interim financial
statements:chanroblesvirtuallawlibrary

A.
Summarized income statement information (See definition of
"Summarized
Financial Information", Section I(b)(xiii) shall be given
separately
as to each subsidiary not consolidated or 50 percent owned person or as
to each group of such subsidiaries or 50 percent or less owned persons
for which separate individual or group statements would otherwise be
required
for annual periods.

B.
If appropriate, the income statement shall show earnings per share and
dividends declared per share applicable to common stock. The basis of
the
earnings per share computation shall be stated together with the number
of shares used in the computation.

C.
If, during the most recent interim period presented, the registrant or
any of its consolidated subsidiaries entered into a business
combination
treated for accounting purposes as a pooling of interests, the interim
financial statements for both the current year and the preceding year
shall
reflect the combined results of the pooled businesses. Supplemental
disclosure
of the separate results of the combined entities for the periods prior
to the combination shall be given, with appropriate explanations.

D.
Where a material business combination accounted for as a purchase has
occurred
during the current fiscal year, pro forma disclosure shall be made of
the
results of operations for the current year up to the date of the most
recent
interim balance sheet provided (and for the corresponding period in the
preceding year) as though the companies had combined at the beginning
of
the period being reported on. This pro forma information
should
as a minimum show revenues, income before extraordinary items and the
cumulative
effect of accounting changes, including such income on a per share
basis,
and net income and net income per share.

E.
Where the registrant has disposed of any significant segment of its
business
revenues and net income--total and per share--for all periods shall be
disclosed.

F.
In addition to meeting the reporting requirements specified by existing
standards for accounting changes, the registrant shall state the date
of
any material accounting change and the reasons for making it. In
addition,
for filings on Form 17-Q, a letter from the independent accountant
shall
be filed as an exhibit in the first Form 17-Q filed subsequent to the
date
of an accounting change indicating whether or not the change is to an
alternative
principle which in his judgment is preferable under the circumstances;
except that no letter from the accountant need be filed when the change
is made in response to a standard adopted by the Philippine ASC which
requires
such change.

G.
Any material retroactive prior period adjustment made during any period
covered by the interim financial statements shall be disclosed,
together
with the effect thereof upon net income--total and per share--of any
prior
period included and upon the balance of retained earnings. If results
of
operations for any period presented have been adjusted retroactively by
such an item subsequent to the initial reporting of such period,
similar
disclosure of the effect of the change shall be made.

H.
Any unaudited interim financial statements furnished shall reflect all
adjustments which are, in the opinion of management, necessary to a
fair
statement of the results for the interim periods presented. A statement
to that effect shall be included. Such adjustments shall include, for
example,
appropriate estimated provisions for bonus and profit sharing
arrangements
normally determined or settled at year-end. If all such adjustments are
of a normal recurring nature, a statement to that effect shall be made;
otherwise, there shall be furnished information describing in
appropriate
detail the nature and amount of any adjustments other than normal
recurring
adjustments entering into the determination of the results shown.

iii.
Periods to be covered. - The periods for which interim financial
statements
are to be provided in registration forms are stated in Section 2(b).
For
filings on Form 17-Q, financial statements shall be provided as set
forth
below:chanroblesvirtuallawlibrary

A.
An interim balance sheet as of the end of the most recent fiscal
quarter
and a balance sheet as of the end of the preceding year. The balance
sheet
as of the end of the preceding fiscal year may be condensed to the same
degree as the interim balance sheet provided. An interim balance
sheet as of the end of the corresponding fiscal quarter of the
preceding
fiscal year need not be provided unless necessary for an understanding
of the impact of seasonal fluctuations on the registrant's financial
condition.

B.
Interim statements of income shall be provided for the most recent
fiscal
quarter, for the period between the end of the preceding fiscal year
and
the end of the most recent fiscal quarter, and for the corresponding
periods
of the preceding fiscal year. Such statements may also be presented for
the cumulative twelve month period ended during the most recent
quarterly
period and for the corresponding preceding period.

C.
Interim statements of cash flows shall be provided for the period
between
the end of the preceding fiscal year and the end of the most recent
fiscal
quarter, and for the corresponding period of the preceding fiscal year.
Such statements may also be presented for the cumulative twelve- month
period ended during the most recent fiscal quarter and for the
corresponding
preceding period.

D.
Registrants engaged in seasonal production and sale of a single-crop
agricultural
commodity may provide interim statements of income and of cash flows
for
the twelve month period ended during the most recent quarterly period
and
for the corresponding preceding period in lieu of the year-to-date
statements
specified in (B) and (C) above.

iv.
Filing
of other interim financial information in certain cases. - The
Commission
may, upon the informal written request of the registrant, and where
consistent
with the protection of investors, permit the omission of any of the
interim
financial information herein required or the filing in substitution
therefor
of appropriate information of comparable character. The Commission may
also by informal written notice require the filing of other information
in addition to, or in substitution for, the interim information herein
required in any case where such information is necessary or appropriate
for an adequate presentation of the financial condition of any person
for
which interim financial information is required, or whose financial
information
is otherwise necessary for the protection of investors.

7.
Pro Forma Financial Information

a.
Presentation requirements

i.
Pro forma financial information shall be furnished when any of the
following
conditions exist:chanroblesvirtuallawlibrary

A.
During the most recent fiscal year or subsequent interim period for
which
a balance sheet is required by Section 2(b), a significant business
combination
accounted for as a purchase has occurred (for purposes of this Rule,
the
term "purchase" encompasses the purchase of an interest in a
business
accounted for by the equity method);

B.
After the date of the most recent balance sheet filed pursuant to
Section
2(b), consummation of a significant business combination to be
accounted
for by either the purchase method or pooling-of-interests method of
accounting
has occurred or is probable;

C.
Securities being registered by the registrant are to be offered to the
security holders of a significant business to be acquired or the
proceeds
from the offered securities will be applied directly or indirectly to
the
purchase of a specific significant business;

D.
The disposition of a significant portion of a business either by sale,
abandonment or distribution to shareholders by means of a spin-off,
split-up
or split-off has occurred or is probable and such disposition is not
fully
reflected in the financial statements of the registrant included in the
filing;

E.
During the most recent fiscal year or subsequent interim period for
which
a balance sheet is required by Section 2(b), the registrant has
acquired
one or more real estate operations or properties which in the aggregate
are significant, or since the date of the most recent balance sheet
filed
pursuant to that Part the registrant has acquired or proposes to
acquire
one or more operations or properties which in the aggregate are
significant.

F.
The registrant previously was a part of another entity and such
presentation
is necessary to reflect operations and financial position of the
registrant
as an autonomous entity; or

G.
Consummation of other events or transactions has occurred or is
probable
for which disclosure of pro forma financial information would be
material
to investors.

ii.
A business combination or disposition of a business shall be considered
significant if:chanroblesvirtuallawlibrary

A.
A comparison of the most recent annual financial statements of the
business
acquired or to be acquired and the registrant's most recent annual
consolidated
financial statements filed at or prior to the date of acquisition
indicates
that the business would be a significant subsidiary pursuant to the
definition
specified in Section I(b)(xi), or

B.
The business to be disposed of meets the definition of a significant
subsidiary
in Section I(b)(xi).

iii.
When consummation of more than one transaction has occurred or is
probable
during a fiscal year, the tests of significance in (ii) above shall be
applied to the cumulative effect of those transactions.. If the
cumulative
effect of the transactions is significant, pro forma financial
information
shall be presented.

iv.
For purposes of this Rule, the term business should be evaluated in
light
of the facts and circumstances involved and whether there is sufficient
continuity of the acquired entity's operations prior to and after the
transactions
so that disclosure of prior financial information is material to an
understanding
of future operations. A presumption exists that a separate entity, a
subsidiary,
or a division is a business. However, a lesser component of an entity
may
also constitute a business. Among the facts and circumstances which
should
be considered in evaluating whether an acquisition of a lesser
component
of an entity constitutes a business are the following:chanroblesvirtuallawlibrary

A.
Whether the nature of the revenue-producing activity of the component
will
remain generally the same as before the transaction; or

B.
Whether any of the following attributes remain with the component after
the transaction:chanroblesvirtuallawlibrary

I.
Physical facilities.

II.
Employee base.

III.
Market distribution system.

IV.
Sales force.

V.
Customer base.

VI.
Operating rights.

VII.
Production techniques, or

VIII.
Trade names.

v.
This Rule does not apply to transactions between a parent company and
its
wholly owned subsidiary.

b.
Preparation requirements

i.
Objective
- Pro forma financial information should provide investors with
information
about the continuing impact of a particular transaction by showing how
it might have affected historical financial statements if the
transaction
had been consummated at an earlier time. Such statements should assist
investors in analyzing the future prospects of the registrant because
they
illustrate the possible scope of the change in the registrant's
historical
financial position and results of operations caused by the transaction.

ii.
Form and content:chanroblesvirtuallawlibrary

A.
Pro forma financial information shall consist of a pro forma condensed
balance sheet, pro forma condensed statements of income, and
accompanying
explanatory notes. In certain circumstance (i.e., where a
limited
number of pro forma adjustments are required and those adjustments are
easily understood), a narrative description of the pro forma effects of
the transactions may be furnished in lieu of the statements described
herein.

B.
The pro forma financial information shall be accompanied by an
introductory
paragraph which briefly sets forth a description of (I) the
transaction,
(II) the entities involved, and (III) the periods for which the pro
forma
information is presented. In addition, an explanation of what the pro
forma
presentation shows shall be set forth.

C.
The pro forma condensed financial information need only include major
captions
(i.e., the numbered captions) prescribed by the applicable Parts of
this
Regulation. Where any major balance sheet caption is less than 10
percent
of total assets, the caption may be combined with others. When any
major
income statement caption is less than 15 percent of average net income
of the registrant for the most recent three fiscal years, the caption
may
be combined with others. In calculating average net income, a loss year
should be excluded unless losses were incurred in each of the most
recent
three years, in which case the average loss shall be used for purposes
of this test. Notwithstanding these tests, "minimal" amounts need not
be
shown separately.

E.
The pro forma condensed income statement shall disclose income (loss)
from
continuing operations before nonrecurring charges or credits directly
attributable
to the transaction. Material nonrecurring charges or credits and
related
tax effects which result directly from the transaction and which will
be
included in the income of the registrant within the 12 months
succeeding
the transaction shall be disclosed separately. It should be clearly
indicated
that such charges or credits were not considered in the pro forma
condensed
income statement. If the transaction for which pro forma
financial
information is presented relates to the disposition of a business, the
pro forma results should give effect to the disposition and be
presented
under an appropriate caption.

F.
Pro forma adjustments related to the pro forma condensed income
statement
shall be computed assuming the transaction was consummated at the
beginning
of the fiscal year presented and shall include adjustments which give
effect
to events that are (I) directly attributable to the transaction, (II)
expected
to have a continuing impact on the registrant, and (III) factually
supportable.
Pro forma adjustments to the pro forma condensed balance sheet shall be
computed assuming the transaction was consummated at the end of the
most
recent period for which a balance sheet is required by Section 2(b) and
shall include adjustments which give effect to events that are directly
attributable to the transaction and factually supportable regardless of
whether they have a continuing impact or are nonrecurring. All
adjustments
should be referenced to notes which clearly explain the assumptions
involved.

G.
Historical primary and fully diluted per share data based on continuing
operations (or net income if the registrant does not report either
discontinued
operations, extraordinary items, or the cumulative effect of accounting
changes) for the registrant, and primary and fully diluted pro forma
per
share data based on continuing operations before nonrecurring charges
or
credits directly attributable to the transaction shall be presented on
the face of the pro forma condensed income statement together with the
number of shares used to compute the per share data. For transactions
involving
the issuance of securities, the number of shares used in the
calculation
of the pro forma per share data should be based on the weighted average
number of shares outstanding during the period adjusted to give effect
to shares subsequently issued or assumed to be issued had the
particular
transaction or event taken place at the beginning of the period
presented.
If a convertible security is being issued in the transaction,
consideration
should be given to the possible dilution of the pro forma per share
data.

H.
If the transaction is structured in such a manner that significantly
different
results may occur, additional pro forma presentations shall be made
which
give effect to the range of possible results.

INSTRUCTIONS

1.
The historical statements of income used in the pro forma financial
information
shall not report operations of a segment that has been discontinued,
extraordinary
items, or the cumulative effects of accounting changes. If
the historical statement of income includes such items, only the
portion
of the income statement through "income from continuing operations" (or
the appropriate modification thereof) should be used in preparing pro
forma
results.

2.
For a purchase transaction, pro forma adjustments for the income
statement
shall include amortization of goodwill, depreciation and other
adjustments
based on the allocated purchase price of net assets
acquired.
In some transactions, such as in financial institution acquisitions,
the
purchase adjustments may include significant discounts of the
historical
cost of the acquired assets to their fair value at the acquisition
date.
When such adjustments will result in a significant effect on earnings
(losses)
in periods immediately subsequent to the acquisition which will be
progressively
eliminated over a relatively short period, the effect of the purchase
adjustments
on reported results of operations for each of the next five years
should
be disclosed in a note.

3.
For a disposition transaction, the pro forma financial information
shall
begin with the historical financial statements of the existing entity
and
show the deletion of the business to be divested along with the pro
forma
adjustments necessary to arrive at the remainder of the existing
entity.
For example, pro forma adjustments would include adjustments of
interest
expense arising from revised debt structures and expenses which will be
or have been incurred on behalf of the business to be divested such as
advertising costs, executive salaries and other costs.

4.
For entities which were previously a component of another entity, pro
forma
adjustments should include adjustments similar in nature to those
referred
to in Instruction 3 above. Adjustments may also be necessary when
charges
for corporate overhead, interest, or income taxes have been allocated
to
the entity on a basis other than one deemed reasonable by management.

5.
Adjustments to reflect the acquisition of real estate operations or
properties
for the pro forma income statement shall include a depreciation charge
based on the new accounting basis for the assets, interest financing on
any additional or refinanced debt, and other appropriate adjustments
that
can be factually supported. See also Instruction 4 above.

6.
When consummation of more than one transaction has occurred or is
probable
during a fiscal year, the pro forma financial information may be
presented
on a combined basis; however, in some circumstances (e.g. depending
upon
the combination of probable and consummated transactions, and the
nature
of the filing) it may be more useful to present the pro forma financial
information on a disaggregated basis even though some or all of the
transactions
would not meet the tests of significance individually. For
combination
presentations, a note should explain the various transactions and
disclose
the maximum variances in the pro forma financial information which
would
occur for any of the possible combinations. If the pro forma financial
information is presented in a proxy or information statement for
purposes
of obtaining shareholder approval of one of the transactions, the
effects
of that transaction must be clearly set forth.

7.
Tax effect, if any, of pro forma adjustments normally should be
calculated
at the statutory rate in effect during the periods for which pro forma
condensed income statements are presented and should be reflected as a
separate pro forma adjustment.

iii.
Periods to be presented

A.
A pro forma condensed balance sheet as of the end of the most recent
period
for which a consolidated balance sheet of the registrant is required by
Section 2(b) shall be filed unless the transaction is already reflected
in such balance sheet.

B.
Pro forma condensed statements of income shall be filed for only the
most
recent fiscal year and for the period from the most recent fiscal year
end to the most recent interim date for which a balance sheet is
required.
A pro forma condensed statement of income may be filed for the
corresponding
interim period of the preceding fiscal year. A pro forma condensed
statement
of income shall not be filed when the historical income statement
reflects
the transaction for the entire period.

C.
For a business combination accounted for as a pooling of interests, the
pro forma income statements (which are in effect a restatement of the
historical
income statements as if the combination had been consummated) shall be
filed for all periods for which historical income statements of the
registrant
are required.

D.
Pro forma condensed statements of income shall be presented using the
registrant's
fiscal year end. If the most recent fiscal year end of any other entity
involved in the transaction differs from the registrant's most recent
fiscal
year end by more than 93 days, the other entity's income statement
shall
be brought up to within 93 days of the registrant's most recent fiscal
year end, if practicable. This updating could be accomplished by adding
subsequent interim period results to the most recent fiscal year-end
information
and deducting the comparable preceding year interim period results.
Disclosure
shall be made of the periods combined and of the sales and revenues and
income for any periods which were excluded from or included more than
once
in the condensed pro forma income statements (e.g., and interim
period that is included both as a part of the fiscal year and the
subsequent
interim period.)

E.
Whenever unusual events enter into the determination of the results
shown
for the most recently completed fiscal year, the effect of such unusual
events should be disclosed and consideration should be given to
presenting
a pro forma condensed income statement for the most recent twelve-month
period in addition to those required in paragraph (iii)(B) above if the
most recent twelve-month period is more representative of normal
operations.

8.
Penalties, Repealing Clause and Effectivity

a.
Penalties

i.
All Financial Statements submitted to this Commission must adhere
strictly
to the provisions of these Rules; any financial statements filed which
are not in accordance with these Rules shall be considered as if NOT
FILED
at all.

iii.
Whenever appropriate, the Certified Public Accountant who certified to
the Financial Statements shall be suspended or barred from practicing
before
this Commission for such period of time as it may deem adequate.

b.
Repealing Clause

All
rules and regulations, circulars, or memoranda or any part thereof, in
conflict with or contrary to these Rules or any portion hereof, are
hereby
repealed or modified accordingly.

c.
Effectivity

The
implementation of this Rule shall be required for financial statements
for the year ended on December 31, 2000 and thereafter.

SRC
Rule 72.1
General
Rules and Regulations for Filing of SEC Forms with the Securities and
Exchange
Commission

1.
Applicable Rules and Forms. - The form and content of filings with
the Commission pursuant to the Code,
and rules adopted thereunder, shall conform to the applicable rules and
forms as in effect on the initial filing date thereof and to the
provisions
hereof.

2.
Number
of Copies; Binding; Signatures. -

a.
Except as provided in a particular form, five (5) copies of the
complete
filing, including exhibits and all other papers and documents filed as
a part thereof, shall be filed with the Commission. Each copy shall be
bound, in one or more parts, without stiff covers. The binding shall be
on the left side in such a manner as to leave the reading matter
legible.
At least one copy of the filing shall be manually signed by the persons
specified in the appropriate rule and/or related form. Unsigned copies
shall be conformed. All five (5) copies (original and four conformed)
are
for Commission use only, including one copy for the public reference
room.

b.
Each conformed copy shall be identical in content, page order, and
pagination
to the original filing including the main document, its table of
contents,
and any sections, exhibits, attachments, or other materials appurtenant
thereto.

c.
Duplicated or facsimile versions of manual signatures of persons
required
to sign any document filed or submitted to the Commission under the Code
shall be considered manual signatures for purposes of the Code and
rules
and regulations thereunder, provided that, the original manually signed
document is retained by the filer for a period of five (5) years and
upon
request the filer furnishes to the Commission or the staff the original
manually signed document.

3.
Requirements
as to Paper, Printing, Language and Pagination. -

a.
All filings shall be filed using black ink on good quality, unglazed,
white
letter sized paper 81/2 x 11 inches in size, or on A-4 sized paper,
insofar
as practicable. To the extent that the reduction of larger documents
would
render them illegible, such documents may be filed on paper larger than
81/2 x 11 inches in size. All original and conformed pages shall be
utilized
on one side only, with the exception of a prospectus which may be
two-sided.

b.
All filings, and, insofar as practicable, all papers and documents
filed
as a part thereof shall be printed, lithographed, mimeographed or
typewritten.
However, the statement or any portion thereof may be prepared by any
similar
process which, in the opinion of the Commission, produces copies
suitable
for a permanent record. Irrespective of the process used, all copies of
any such material shall be clear, easily readable and suitable for
repeated
photocopying; shall be submitted on paper not less in quality,
legibility,
and durability to that produced by a standard copying machine in good
working
order; and shall not be submitted on carbon paper or on light-weight
onion
skin paper. Debits in credit categories and credits in debit categories
shall be designated so as to be clearly distinguishable as such on
photocopies.

c.
All filings shall be in the English language. If any exhibit or other
paper
or document filed as part of the registration statement is in a foreign
language, it shall be accompanied by a summary, version or translation
in the English language. All documents executed outside the Philippines
must be authenticated by the Embassy, Consulate or Legation of the
Philippines
in the country where the document originated.

d.
The manually signed original (or in the case of duplicate originals,
one
duplicate original) of all filings, and all conformed copies, including
registration statements, applications, statements, reports or other
documents
shall be numbered sequentially (in addition to any internal numbering
which
otherwise may be present) by handwritten, typed, printed or other
legible
form of notation from the first page of the document through the last
page
of that document and any exhibits or attachments thereto. Further, the
total number of pages contained in a numbered original and in each
numbered
and conformed copy shall be set forth on the first page of the document.

e.
The body of all printed statements and reports and all notes to
financial
statements and other tabular data included therein shall be in
prominent
type at least as large and as legible as 10-point type. However, to the
extent necessary for convenient presentation, financial statements and
other tabular data, including tabular data in notes, may be in at least
as large and as legible as 8-point type. All such type shall be leaded
at least 2 points.

f.
All original and conformed copies shall be submitted under cover of a
standard
cover page which shall identify the specific filing form type or form
amendment
or response to a show cause letter, the period ended date for any
report
or general information sheet or financial statement or other period
based
filing, the complete company name and principal business address and
main
telephone number, the fiscal year end date of the company, the SEC
identification
number, the SEC File Number if the filing is an amended, revised,
supplementary
or post-effective prospectus or an amendment to any type of
registration
or transaction filing, each type of Commission registration currently
effective
for the filing entity, and such other information as may be required by
the Commission from time to time on cover pages for all SEC filings or
for any specific type of filing. From time to time the Commission will
publish a list showing the SEC filing form types currently in effect so
applicants and registrants can comply with the requirement to indicate
the specific form type on the standard cover page.

4.
Information Unknown or Not Reasonably Available. -

Other
than financial statements, information required need be given only
insofar
as it is known or reasonably available to the registrant. If any
required
information is unknown and not reasonably available to the registrant,
either because obtaining such would involve unreasonable effort or
expense,
or because it rests peculiarly within the knowledge of another person
not
affiliated with the registrant, the information may be omitted, subject
to the following conditions:chanroblesvirtuallawlibrary

a.
The registrant shall give such information on the subject as it
possesses
or can acquire without unreasonable effort or expense, together with
the
sources thereof.

b.
The registrant shall include a statement either showing that
unreasonable
effort or expense would be involved or indicating the absence of any
affiliation
with the person within whose knowledge the information rests and
stating
the result of a request made to such person for the information.

5.
Supplemental
Information. -

The
Commission or its staff may, where it is deemed appropriate, request
supplemental
information concerning the filing or any of the content thereof.
This information shall not be required to be filed with or deemed part
of the registration statement or report. The information shall be
returned
to the registrant upon request, provided that:chanroblesvirtuallawlibrary

a.
Such request is made at the time such information is furnished to the
staff;

b.
The return of such information is consistent with the protection of
investors.

6.
Place
of Filing. -

All
filings subject to the provisions of this rule shall be filed at the
principal
office of the Commission, Metro Manila, Philippines.

7.
Preparation
of Filings Generally. -

a.
Numbers
and Captions of Items. All filings shall contain the numbers and
captions
of all items of the appropriate form, but the text of the items may be
omitted provided the answers thereto are so prepared as to indicate to
the reader the coverage of the items without the necessity of his
referring
to the text of the items or instructions thereto. However, where any
item
requires information to be given in tabular form, it shall be given in
substantially the tabular form specified in the item. All instructions,
whether appearing under the items of the form or elsewhere therein, are
to be omitted. Unless expressly provided otherwise, if any item is
inapplicable
or the answer thereto is in the negative, an appropriate statement to
that
effect shall be made.

b.
Additional
Exhibits. The registrant may file such exhibits as it may desire
in
addition to those required by the appropriate form. Such exhibits shall
be so marked as to indicate clearly the subject matters to which they
refer.

c.
Substantially
Identical Documents. In any case where two or more indentures,
contracts,
franchises, or other documents required to be filed as exhibits are
substantially
identical in all material respects except as to the parties thereto,
the
dates of execution, or other details, the registrant need file a copy
of
only one of such documents, with a schedule identifying the other
documents
omitted and setting forth the material details in which such documents
differ from the document of which a copy is filed. The Commission may
at
any time in its discretion require the filing of copies of any
documents
so omitted.

8.
Preparation
of Registration Statement and Prospectus. -

a.
In addition to the provisions of paragraphs 1 through 7 hereof, the
following
provisions shall apply to the preparation and filing of registration
statements:chanroblesvirtuallawlibrary

i.
A registration statement shall consist of the facing sheet of the
applicable
form cross reference sheet; a prospectus containing the information
called
for by Part I of such form; the information, list of exhibits,
undertakings
and signatures required to be set forth in Part II of such form;
financial
statements and schedules; exhibits; any other information or documents
filed as part of the registration statement; and all documents or
information
incorporated by reference in the foregoing (whether or not required to
be filed).

ii.
All general instructions, instructions to items of the form, and
instructions
as to financial statements, exhibits, or prospectuses are to be omitted
from the registration statement in all cases.

iii.
The prospectus shall contain the information called for by all of the
items
of Part I of the applicable form, except that unless otherwise
specified,
no reference need be made to inapplicable items, and negative answers
to
any item in Part I may be omitted. A copy of the prospectus may be
filed
as a part of the registration statement in lieu of furnishing the
information
in item-and-answer form. Wherever a copy of the prospectus is filed in
lieu of information in item-and-answer form, the text of the items of
the
form is to be omitted from the registration statement, as well as from
the prospectus, except to the extent provided in paragraph iv below.

iv.
Where any items of a form calls for information not required to be
included
in the prospectus, generally Part II of such form, the text of such
items,
including the numbers and captions thereof, together with the answers
thereto
shall be filed with the prospectus under cover of the facing sheet of
the
form as a part of the registration statement. However, the text of such
items may be omitted provided the answers are so prepared as to
indicate
the coverage of the item without the necessity of reference to the text
of the item. If any such item is inapplicable, or the answer thereto is
in the negative, a statement to that effect shall be made. Any
financial
statements not required to be included in the prospectus shall also be
filed as a part of the registration statement proper, unless
incorporated
by reference pursuant to SRC Rule 12-2.

b.
Securities to be issued as a result of stock splits, stock dividends
and
anti-dilution provisions and interests to be Issued pursuant to certain
employee benefit plans.

i.
If a registration statement purports to register securities to be
offered
pursuant to terms which provide for a change in the amount of
securities
being offered or issued to prevent dilution resulting from stock
splits,
stock dividends or similar transactions, such registration statement
shall,
unless otherwise expressly provided, be deemed to cover the additional
securities to be offered or issued in connection with any such
provision.

ii.
If prior to completion of the distribution of the securities covered by
a registration statement, additional securities of the same class are
issued
or issuable as a result of a stock split or stock dividend, the
registration
statement shall, unless otherwise expressly provided therein, be dee